The recent pullback in Google Inc. shares will be shortlived, says Citigroup Capital Markets analyst Mark Maha
He reiterated his Buy rating and $640 price target based on four key updates to Google's long-term thesis. The first is the potential impact of new search advertising products.
"We believe Google’s four recently introduced Paid Search Ad Products (Sitelinks, Product Advertising, Local/Map Advertising, and Comparison Ads) not only reflect continued — and necessary — innovation at Google but also provide further evidence of Search’s growth runway and the potential for Paid Click growth reacceleration – a key investor focus – as well as further monetization growth," he wrote in a note to cleints.
Mr. Mahaney is also bullish on Google's growing display ad opportunity and its increased traction for Google's YouTube property.
Lastly, he is attracted to the tech giant's strong cash adjusted P/E multiple of 17x that is in-line with Nasdaq's forward multiple.
"Given GOOG’s growth outlook, competitive moats, biz model & management strength, we view this relative valuation as attractive," he said.