Google Inc. (GOOG:US), operator of the world’s largest search engine, closed at a record high after reporting earnings last week that topped estimates, buoying investor sentiment about growth prospects.
The shares (GOOG:US) advanced 2.6 percent to $775.60 at yesterday’s close in New York, their highest value since the company went public in August 2004. They have gained 34 percent in the past 12 months, compared with a 14 percent increase for the Standard & Poor’s 500 Index.
Google is benefiting from rising demand as marketers seek to advertise via mobile devices and local services, areas where rivals such as Facebook Inc. (FB:US) and Groupon Inc. (GRPN:US) also sell advertising. Fourth-quarter profit, excluding certain items, rose to $10.65 a share, the company said Jan. 22. Analysts on average had estimated profit of $10.50 a share.
“In all of the growth areas of online advertising, Google has a big presence,” Sameet Sinha, an analyst at B Riley & Co., said in an interview. “Rather than picking the best horse, here’s someone executing on all fronts.”
Sinha rates (GOOG:US) Google a buy, and doesn’t own any shares.
Google had more than 41 percent of all digital ad revenue in the U.S. in 2012, according to EMarketer Inc. In mobile, Google holds a 53 percent share, compared with 8.4 percent for Facebook. Google dominates the U.S. search-based advertising market, with a 75 percent share, according to EMarketer’s estimates.
Three-quarters of the 33 analysts covering Google rate the shares a buy, according to data compiled by Bloomberg. Those analysts have (GOOG:US) raised their target price for the stock, on average, to $824.83, from $796.66 a day before the company’s latest earnings report.
Sales at Mountain View, California-based Google rose 36 percent in the fourth quarter to $14.42 billion from a year earlier. The boost came after the average cost of ads rose 2 percent during the fourth quarter from the previous period, the company said.
To contact the reporter on this story: Brian Womack in San Francisco at firstname.lastname@example.org
To contact the editor responsible for this story: Tom Giles at email@example.com