Google still a top pick for Wall Street, despite mobile ad challenges

Thu Apr 17, 2014 11:56am EDT
 
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By Saqib Iqbal Ahmed

(Reuters) - Google Inc's disappointing first-quarter results left Wall Street unfazed about the internet giant's ability to come to grips with the shift to the fast-growing mobile advertising market.

Google shares were down about 3 percent in early trading on Thursday, and at least 12 brokerages cut their target price on the stock. But most analysts kept a "buy" rating or equivalent on the company's shares.

"Despite an expectations-miss quarter, Google remains one of the best-positioned stocks for many of the secular growth drivers in the Internet space," RBC Capital analyst Mark Mahaney, who kept his "outperform" rating on the stock, said in a note to clients.

Of the 46 analysts covering Google, 35 have a "buy" or equivalent rating on the stock. Nobody has a "sell".

Google, Facebook Inc and Twitter Inc are revamping their products and advertising business to try to take advantage of a global shift to mobile phones and tablets.

For investors in Google, accustomed to the company enjoying one of the highest ad margins in the business, mobile ads have translated to a steep drop in ad rates.

Advertising rates on mobile phones are typically cheaper than traditional online ads because of their smaller screens. But mobile advertising continues to make up a bigger slice of the revenue of Internet companies.

Google company reported a 26 percent increase in paid clicks volumes but the average cost-per-click declined 9 percent.   Continued...

 
A Google logo is seen at the entrance to the company's offices in Toronto September 5, 2013. REUTERS/Chris Helgren