• Reuters, Monday, May 11, 2009 1:17 PM

Oh, what a difference a rally makes: Sanford C. Bernstein boosted its price target on search giant Google a whopping 30% to $600, saying improving economic conditions would translate into higher revenue-per-click for paid search advertising. In a research note, analyst Jeffrey Lindsay suggested the rally would last through the end of the year, boosting Google's year-over-year performance in the fourth quarter. "Although revenue per click (RPC) weakness may persist through the second quarter and possibly into the third quarter, we think the trend will reverse by the fourth quarter and restore Google's revenue growth to 14 percent year over year," he said. That kind of growth would help raise Google's revenue for the year to 7%. According to Reuters Estimates, most analysts expect Google's revenue growth to be 4% in 2009.

However, Lindsay noted that a paid search recovery is very much contingent on an economic recovery since the advertising tactic does not involve formal contracts and is sold in a real-time electronic auction for keywords. Even though Google's paid click growth has been strong-up 17% in the first quarter from a year earlier- revenue per click has fallen the past two quarters as advertisers scaled back the amount they were willing to spend per click. This, said Lindsay, will rebound as the economy rebounds.

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