Google Enhanced Campaigns Push Up Analysts' Stock Target
Analysts at J.P. Morgan Chase & Co. issued a report Monday raising the target price for Google's shares to $1,025. In a reversal of fortune, the move counters Apple's declining stock prices. Does it also indicate a shift in ad market share?
J.P. Morgan Chase analyst Doug Anmuth points to Google's rollout of Enhanced Campaigns as contributing to the decision. He writes in a research note about the positive impact on Google's climbing margins, increasing cost per clicks (CPCs) as brands begin to spend more marketing and advertising dollars for AdWords campaigns.
Adobe Systems released a report last week detailing a 6% increase in CPCs for search marketing campaigns since March, as marketers scurry to meet the July 22 deadline. Anmuth held a call last week with execs from Rimm-Kaufman Group and iProspect. Both search marketing companies reported strong Q2 search growth with RKG reporting more than 24% increase year-on-year and 8% to 10% quarter on quarter, and iProspect at more than 18% and 12%, respectively.
"We are also more positive on YouTube as our checks suggest TV buyers would increasingly like to shift video spend online, and we are optimistic about Motorola's new product pipeline and cost controls," he wrote. "YouTube's top 100 global advertisers increased their spending 50% in 2012, and YouTube should further benefit from advertising on the new iOS app, which rolled out in late 2012."
It's been more than a year since Google entertained the possibility of a stock split, followed by a letter earlier this year from the company's co-founders Larry Page and Sergey Brin. Earlier this month, Google settled a lawsuit brought on by shareholders unhappy with the decision. Reports suggested it would give the two more control of the company.
Earlier this year, Google suffered from a decline in profitability. Now, as Google's stock soars higher, Apple's continues to slip. The two companies have seen a reversal of fortune in the past few months. Global Equities Research managing director Trip Chowdhry writes in a research note that Apple's employees moral is at an all-time low; many worry about what the company's declining stock price means for the future.
It happened after Apple announced a "record $100 billion in share buy backs and dividends," sending Apple stock to close at a 52-week low, causing an employee retention problem. Chowdhry explains that recruiters are seeing more employees from Apple applying for jobs at Google, LinkedIn, Facebook and Hewlett-Packard.