The majority of analysts are positive on Google
Out of the 11 analysts covering Google (GOOG), nine have “buy” recommendations and two have “hold” recommendations. The analyst stock price target for the company is $931 with a median target estimate of $925. Google is trading at a discount of 17% to its median target.
As of September 2, 2016, Google has generated returns of 31% in the trailing-12-month period and 4% in the trailing-one-month period. Meanwhile, other major Internet and technology players like Facebook (FB), Twitter (TWTR), and Baidu (BIDU) have generated returns of 51%, -26%, and 23%, respectively, in the trailing-12-month period.
Why analysts are positive about Google
In the earlier parts of the series we discussed that Google remains successful in capitalizing on the rapid shift of consumers to the mobile space, and analysts expect the company’s earnings to grow at an average annual rate of 16.4% over the next five years. Google’s advertising revenue continues to rise at a brisk pace thanks to the strong performance of its mobile search business.
As more and more advertisers shift toward video, Google’s YouTube, which is growing quickly, remains well positioned to benefit the most from the shift. Meanwhile, the company remains successful in containing costs. Almost all of its cost drivers saw a relative fall year-over-year in the last reported quarter. Considering Google’s impressive 1H16 results and efforts to drive its core business, 2016 looks like it will be another strong year for the company.