Merrill Lynch: Google To Lift Internet Advertising
"We expect Google's advertising share growth to continue, and Google's innovation is expanding the online ad market," wrote analyst Justin Post in the report. Post continued: "Google is not just a share growth story. Better targeting of advertising on the Internet is making Internet usage time more valuable."
What's more, wrote Post, Merrill Lynch's forecast of 28 percent growth in U.S. Internet advertising for this year now appears "too conservative," given that Google alone is likely to grow by 57 percent year-over-year.
Merrill Lynch also now forecasts that Google shares will rise to $540, up from the current mid-400 range. Other analysts to increase their target pricing to above $500 included Goldman Sachs and Lehman Brothers.
The nod from Wall Street came after Google reported record first-quarter revenue of $2.25 billion. Google's financial filings also revealed that the company's own sites are growing faster than its publisher network. The company reported that revenues from its sites came to $1.3 billion--or 58 percent of the total--while revenue from its AdSense network came to $928 million, or 41 percent. In contrast, in October 2004--when the company issued its first stock report--Google-owned sites accounted for 51 percent of revenues, while AdSense sites contributed 48 percent.