Google Profit View Lifted At Benchmark Capital

Benchmark Capital raised its profit estimates and price target on Google Inc. (GOOG), citing the company's strong operating momentum in search business.

We believe Google's operating momentum remains strong and that it will post another 25% revenue growth quarter for 4Q10, analyst Clayton Moran wrote in a note to clients.

The analyst raised his fourth quarter profit forecast by 20 cents to $8.38 a share and his revenue estimate stands at $6.2 billion. Wall Street expects Google to earn $8.01 a share on revenue of $6.03 billion.

Moran said a 12 percent rise in eCommerce sales and growing online advertising point to a strong holiday season. As a direct marketing vehicle, Google benefits from strengthened eCommerce. Advertising channel checks indicate that marketing is also strong, with no remaining recession-induced hesitancy.

Users are researching products more, indicating heightened value in search. Online share gains appear to have accelerated in the fourth quarter, the analyst said.

Moran, who has a buy rating on Google stock, said the search giant is a prime beneficiary of online seasonal strength and is more heavily weighted than peers to the retail sector.

In addition, we believe Google has gained search spend share due to uncertainty and advertiser migration issues related to the Yahoo-Bing integration. Lastly, Google Instant is increasing paid clicks, Moran added.

The analyst, who also raised his price target on Google stock to $700 from $650, said that the stock market is not crediting Google enough for stealing display share, with Ad exchange and YouTube have strong positions in the high-growth segments of real-time bidding and video.

Google's 3Q disclosure of $2.5 billion in annual display revenue was likely the beginning of significant momentum in display, Moran said.

Shares of California-based Google closed Tuesday's regular trading session at $594.91 on Nasdaq.