Why Are Analysts Raising Google’s Price Targets?

Some stock analysts have high hopes for Google (NASDAQ:GOOG), or at least for its stock, as they raise their price targets by major jumps following earnings. Google’s advertising scheme might have something to do with the boost.

Google’s ads

One of Google’s key revenue sources is advertising — on its site, on sites it supports, all over web. And companies pay a good chunk of change for Google’s vast reach and massive audience. Advertising can make up as much as 97 percent of Google’s revenue. So, when the numbers around Google’s advertising change, analysts need to be thinking about how that will impact the company.

The recent changes

One thing that shook people’s confidence was the lowered average cost-per-click compared to a year earlier, which tells how much Google is getting paid from advertisers. The average cost-per-click dropped 15 percent in the third quarter from a year earlier, and declined 6 percent in the fourth quarter from a year earlier…