Jefferies ups Google price target

(Reuters) - Jefferies raised its price target on Google Inc's (GOOG.O) stock to $695 from $600, while reiterating its buy rating, citing optimism among advertisers for fiscal 2010 amid improving macro environment.

"Our channel checks point to strengthening advertising, e-commerce environment and improving fiscal 2010 outlook, which bodes well for Google," analyst Youssef Squali wrote in a note.

Online sales are up 3 percent from November 1 to December 6 of this year, supporting the prospect for a modestly positive growth in e-commerce this holiday season compared to a 3 percent drop last year, Squali said.

"Google, with its ability to cost effectively drive traffic to e-tailers, stands to benefit disproportionately."

Over 65 percent of online ad budgets continue to go to 'search', with Google claiming the lion's share, the analyst said.

Commentary out of Yahoo (YHOO.O), AOL (AOL.N) and Value Click (VCLK.O) last week points to strengthening demand from advertisers, he added.

Shares of the company were up nearly a percent at $595.42 in early morning trade on Nasdaq.

(Reporting by Mansi Dutta in Bangalore; Editing by Anil D'Silva)