Though Google's GOOG, +4.67% fourth-quarter earnings Thursday fell short of expectations, analysts are largely staying the course due to their expectations of future growth in new areas and a "shareholder- friendly" earnings call. Google reported adjusted earnings, excluding nonrecurring items, of $4.74 billion, or $6.88 a share, compared with $4.57 billion, or $6.70 a share. This was below the FactSet consensus of $7.12 a share. Revenue rose 15% to $18.1 billion, but fell below analysts' predictions of $18.45 billion. The company's total paid clicks missed FactSet estimates of 17% growth, coming in at 14%, and caused worry about slowing growth. The company also saw its costs rise 22% to $13.7 billion for the quarter. But on Thursday's conference call, Google eased analyst concerns by attributing missed earnings to currency headwinds, offering reassurance that it will cut spending in 2015, and at least an acknowledgment of the fact that "share prices matter." The stock was up about 4% in midday trade Friday. "The overall tone felt a little more shareholder friendly," Deutsche Bank analysts said of the call. They raised their price target to $625 from $615. Google earnings also continue to be bolstered by YouTube, which more than doubled its partner revenue year over year and increased its watch time by 50%. Evan Wilson of Pacific Crest kept his price target at $675, due to expected search growth and new opportunities in e-commerce, hardware, enterprise and robotics, but lowered gross revenue and earnings per share estimates due to currency issues. Bank of America Merrill Lynch analysts were also largely staying the course, sticking with their $580 price target but slightly lowering 2015 net revenue estimates, also due to currency headwinds. Google's earnings beat the expectations of Credit Suisse analysts, who kept their target price at $700, but boosted their net revenue estimates based on future growth in the company's Google Play and Google Display businesses and "pricing convergence" between mobile and desktop. "We continue to believe that Google remains one of the best-positioned in our space to reap the benefits of the proliferation of connected devices over the longer-term," Credit Suisse analysts said. Barclays analysts said they believed Google still had "solid" core assets, but the "inflection point" for reviving the stock was unclear. They lowered their price target to $620 from $650. Goldman Sachs maintained a neutral rating, lowering its price target to $540 from $550 due to reduced estimates, and said it expects the company's market share in digital advertising to shrink. Source: MarketWatch
