Bank of America today slashed its price target for Google by 23 percent and cut its fourth-quarter and 2009 profit estimates for the Internet search giant to reflect an increasingly negative outlook for global advertising.
The Bank cited, “recent weakness in online retail and travel sectors, two of the largest categories in search, will likely have a dampening effect on costs-per-click as advertisers decrease their search advertisement spend”.
The Bank said. E-commerce in the United States fell 4 percent in the first 28 days of November after growing roughly 1.3 percent in October, citing data from tracking firm comScore.
In the travel category, revenue per available hotel room in the United States fell 17 percent in the first week of November after a 7 percent fall in October, according to hotel industry tracker Smith Travel Research, the brokerage said.
September U.S. airline revenue was down 7 percent to 8 percent, and has been declining each month since the end of last year by 1 percent to 3 percent, Bank of America added.
“We see consumers still searching online, but for news and political commentary rather than HDTVs, Blu-Ray players and PCs,” the brokerage said.
Bank of America cut its price target on Google shares to $500 from $650. It lowered its profit view for the fourth quarter to $4.74 a share from $5.24, and for 2009 to $21.45 a share from $22.79.
I thought the headline might read “Google Cuts Bank of America’s Earning Estimates, Sounds Solvency Siren”
… yes, but what BofA misses is the virtually continuously growing hedgemony Google exercises in the online ad biz … with this ability to take from channels (like us), increase market size and penetration, and troubled competitors, their income is likely to fall little if any in 2009.
Steve – sure google is strong in the US but the Internet is a WorldWide market and there are other Company’s out there.