Google‘s (GOOG) third quarter earnings beat the Zacks Consensus Estimate, signaling a much stronger second half of 2010 than anticipated. Additionally, Google provided color on its display, mobile and video business for the first time this quarter, which resulted in nearly all analysts raising estimates for the year.
While the growing competition is always something to look out for, we cannot ignore Google’s market position, solid cash flow, focus on innovation, technology and infrastructure, strategic acquisitions and proactive approach to mobile. Consequently, we are upgrading the shares to Outperform.
GOOG shares are currently trading at a discount to its closest competitor, Yahoo! Inc. We believe the company’s solid position in the core search market and other growth initiatives justify a premium to the peer group.
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