- JP Morgan is raising their 4Q'06 revenue estimate on Google (NASDAQ:GOOG) by $40M based on belief that the co is experiencing strong query volume growth and a noticeable pickup in keyword coverage. Firm's revised 4Q revenue, EBITDA, and EPS estimates are $2.23B, $1.39B, and $2.91. (Prev EPS was 2.86, cosensus $2.88)
According to firm's estimates, Google is on track to grow its global query volumes by 14% in 4Q, vs. the market which the firm believes is tracking up 10%. JPM is consequently increasing their Q/Q volume growth assumption to 14% from 13%, contributing ~$20M of incremental revenue.
Google continued to grow its advertising coverage at a steady pace in 4Q, dispelling some investors' concerns that Google's monetization upside may be tapped out. In 4Q, firm's 50K
keyword survey identified a 4.4% Q/Q increase in coverage to 77.9%.
Although the firm estimates 14% volume growth for Google.com, most competitors are showing muted 4Q growth. They estimate Yahoo!, MSN, and AOL are on pace to grow 4.5%, 3.0%, and 0.0%, respectively in 4Q. As such, they believe Google continues to gain global market share.
Google Remains firm's Top Pick. Google trades at 33.1x F'07 pro forma EPS estimate of $14.50 compared to its peers at 35.7x. Given that Google is growing significantly faster; JPM believes it deserves a premium, and thus maintains Overweight.
Notablecalls: Note that WSJ is out with a negative piece on GOOG this AM saying co's earning growth may hit a speed bump soon as their $10 billion cash hoard in interest-bearing investments like government securities -- isn't likely to grow at the same rate as last year. Will the JPM note outweigh the WSJ piece?
According to firm's estimates, Google is on track to grow its global query volumes by 14% in 4Q, vs. the market which the firm believes is tracking up 10%. JPM is consequently increasing their Q/Q volume growth assumption to 14% from 13%, contributing ~$20M of incremental revenue.
Google continued to grow its advertising coverage at a steady pace in 4Q, dispelling some investors' concerns that Google's monetization upside may be tapped out. In 4Q, firm's 50K
keyword survey identified a 4.4% Q/Q increase in coverage to 77.9%.
Although the firm estimates 14% volume growth for Google.com, most competitors are showing muted 4Q growth. They estimate Yahoo!, MSN, and AOL are on pace to grow 4.5%, 3.0%, and 0.0%, respectively in 4Q. As such, they believe Google continues to gain global market share.
Google Remains firm's Top Pick. Google trades at 33.1x F'07 pro forma EPS estimate of $14.50 compared to its peers at 35.7x. Given that Google is growing significantly faster; JPM believes it deserves a premium, and thus maintains Overweight.
Notablecalls: Note that WSJ is out with a negative piece on GOOG this AM saying co's earning growth may hit a speed bump soon as their $10 billion cash hoard in interest-bearing investments like government securities -- isn't likely to grow at the same rate as last year. Will the JPM note outweigh the WSJ piece?
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