By Daniel Gordon
Search engine giant Google Inc (NASDAQ:GOOGL) posted its second quarter fiscal 2015 earnings on July 16, outpacing analyst predictions. While analysts had predicted earnings of $6.73 per share, the company posted $6.99 earnings per share on a non-GAAP basis. Company revenue also rose 11% from the same quarter of last year to $17.7 billion.
Google's net revenue, which is calculated without including payments to advertising partners, outperformed analysts' forecasts as well. While the company was predicted to net $14.28 billion, Google actually raked in $14.35 billion in net revenue.
Google's new CFO Ruth Porat credited the strong Q2 results to continued growth in “core search, where mobile stood out, as well as YouTube and programmatic advertising.” Porat pledged to continue Google's focus on “developing big new opportunities across a wide range of businesses” with careful attention to “resource allocation.”
On July 17, Raymond James analyst Aaron Kessler reiterated an Outperform rating on Google and raised his price target from $625 to $720. Kessler credited the company's strength to video-sharing website YouTube, which is owned by Google, as a reason for his bullish rating. He also noted the increasing volume of YouTube advertisers, which rose 40% year-over-year, as a catalyst for Google's success.
Aaron Kessler has a 59% overall success rate and an average return of +19.9% per recommendation when measured over a one-year horizon and no benchmark.
Similarly on July 17, RBC Capital analyst Mark Mahaney reiterated an Outperform rating on Google, raising his target price from $640 to $750. Mahaney referenced Google's revenue growth, big margins, and the hiring of the company's new CFO, whom the analyst believes is “part of the drive behind managing costs better at the company,” as the reasoning behind his bullish rating. He noted that revenue growth for the company has been “remarkably consistent for three years in a row for a $70 billion ad run rate business.” Mahaney continued, “[for] the first time in five years, operating margins were actually up year-over-year.”
