July 18 Google Inc is the
best placed of any company to benefit from the shift to mobile,
increased local advertising and wearables, analysts said after
the search giant posted its 18th straight quarter of 20
percent-plus revenue growth.
At least seven brokerages raised their target price on the
stock on Friday by as much as $75, to a high of $700.
Google shares were set to open about 4 percent higher at
just over $600.
The company, which is also set to benefit from the so-called
"internet of things", said on Thursday that second-quarter
revenue rose 22 percent to $15.96 billion, beating the average
analyst estimate of $15.61 billion.
Growth was driven by the company's core search business,
YouTube and product-listing ads, which combined to drive three
times as much mobile traffic for merchants compared with last
year, Jefferies analysts wrote in a note.
Brokerage Jefferies maintained its "buy" rating and $700
price target on the stock.
Of the 46 analysts covering Google, 36 have a "buy" or a
higher rating on the stock and 10 have a "hold". There are no
"sell" ratings, according to StarMine data.
Google earns most of its revenue from advertising.
The number of "paid clicks" by consumers on ads serviced by
Google increased 25 percent year-on-year in the quarter.
However, the average price of the ads declined 6 percent as
ad rates on mobile phones are typically cheaper than traditional
online ads because of their smaller screens.
"Google is successfully transitioning its business from PC
to mobile, and is arguably in a more favorable position in
mobile than it was in PC, which should eventually be reflected
in a higher multiple," Deutsche Bank analyst Ross Sandler wrote
in a client note.
Google also owns Android, the world's most-used mobile
software, and YouTube, the most popular video-streaming service.
Other online companies such as Facebook Inc and
Twitter Inc are also revamping their advertising
businesses to take advantage of the shift to mobile devices.
But Google has established unusually deep competitive
"moats" around its business through scale, aggressive product
innovation and substantial investment, RBC Capital Markets
analysts wrote in a research note.
Google's capital investment budget has topped $17 billion
over the past five years, and the company has spent about $13
billion on research, according to analysts.
The company is also spending big to push into new markets
with innovations such as wearable computers, ultra high-speed
internet access and home automation - the "internet of things."
Google shares were trading at $604.33 before the bell, after
closing at $580.82 on Thursday.
Up to Thursday's close, the stock had risen 26 percent in
the past year. The stock hit an adjusted life high of $615.03 in
(Reporting by Supantha Mukherjee in Bangalore; Editing by Ted