Updated from 9:56 a.m. EST to provide additional analyst comments in the 11th paragraph.
NEW YORK (TheStreet) — It was only last month an analyst said Google (GOOG) was going to hit $1,000 a share sooner or later. Now another one has joined the parade, as Wall Street becomes increasingly bullish on the search giant.
Jefferies analyst Brian Pitz raised his price target to $1,000 from $875, while reiterating a “buy” rating, based on e-commerce traction picking up, YouTube continuing to be the dominant player in video advertising and a belief that mobile cost-per-click will improve. Google shares have enjoyed a strong run this year, tacking on 16.1% year-to-date. The gains look to continue if Google is able to execute on its plan, Pitz notes.
Google still generates the majority of its revenue from advertising, earning $10.65 per share on $11.3 billion in revenue during its fourth quarter. Analysts polled by Thomson Reuters expected Google to earn $10.49 a share on $12.3 billion in revenue in the quarter. Product listing ads continue to be high and Pitz believes that bodes well for Google in the long-run. A PLA is a search ad that includes additional information about the product, including images, pricing and merchant info, not just a blue link. This comes as Google is set to launch a fee-based program for Google Shopping, very similar to Amazon (AMZN) Prime, which should continue the momentum. “As with the US Google Shopping (GS) program (transitioned to 100% paid on Oct. 17), the new, fee-based program will essentially require retailers to buy Product Listing Ads (PLAs) or be omitted from the GS search results,” Pitz wrote in his note. When the U.S. Google Shopping program went to a paid service in October 2012, revenue from Google Web Sites re-accelerated from 15% year-over-year growth to 18% year-over-year growth. Pitz now expects that to be even better in 2013, showing growth of 20% year over year. The growth of YouTube has been nothing short of phenomenal, since Google purchased the nascent Web site in 2006 for $1.65 billion in cash and stock. Bernstein analyst Carlos Kirjner called YouTube “an underappreciated asset” when raising his price target to $1,000 and Pitz is saying the same.