Citi Research On Google Search Trends: There's At Least 2.5% Upside To Revenue Estimates

Analysts at Citi Research recently spoke with search engine marketing agency Merkle and discussed search ad spend trends. As per the firm’s data, Google (Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL))’s 4Q16 overall paid search spend “is trending in-line with 3Q16’s growth rate of 20 percent.”

This sequentially flat growth rate figure for ad spend is still higher than Citi’s forecast, which pointed toward a ~300bps deceleration in Google websites' gross revenue and a ~500bps drop in ex-Fx Google websites' gross revenue.

If, instead of the current estimate for a ~500bps decline in ex-Fx Google websites' gross revenue, Citi anticipated a ~100bps deceleration, the current figures out of Merkle would still imply a 2.5 percent to 3 percent upside to the former’s current net revenue estimate of $20.26 billion.

As positive trends continue to pile up, the Vetr community has a four-star (Buy) rating on both classes of Alphabet (Google’s parent company) stock. Their price target of $847.28 implies a potential return of more than 11.1 percent from current valuations.