After higher expenses and slightly slower growth in advertising, resulting in disappointing earnings, Google (NASDAQ GOOG) is trading down fractionally while the benchmark Nasdaq Composite stock index was trading up 1.45 percent in early morning trade.

After the bell yesterday, Google Inc (NASDAQ GOOG) reported third quarter revenue of $16.52 billion, down slightly from the street’s expectation of $16.58 billion in total revenue. Net income was down 5.3 percent year over year to $2.81 billion, resulting in per share earnings of $6.35 compared with expectations of $6.53, based on S&P Capital IQ data.

Canaccord said that Google continues to deliver close to its 20 percent revenue growth forecasts. While reiterating its buy rating, Canaccord’s research analysts Michael Graham, Marla Ripps and Austin Moldow lowered their price to $700 from $715 but gushed about Google’s close to forecast revenue growth that “highlights the rewards to be reaped from a multi-year, multi-billion dollar obsession with building the ultimate search platform.” The new price target is based on a multiple of 21 times 2015 EPS estimate of $33.36 per share, which is down slightly from $34.04.

Google Inc (NASDAQ GOOG) News: Impact Of Google’s Earngings

While still on track, the report noted web sites revenue growth decelerated modestly in the quarter to 19.8% year over year from four quarters of in a row of 20%+ growth. This was manifested through a slowing in Google paid click growth decelerating to 24 percent year over year from 33 percent.

For its part, Google Inc (NASDAQ GOOG) management is consistent in emphasizing the overall revenue growth as opposed to focusing on separate metrics. The company pointed out strength in mobile pricing and continued progress with YouTube monetization (with Google Preferred attracting a lot of interest from top advertising agencies), which we believe will help drive solid double-digit growth within this segment for some time, the Canaccord report observed.

Google Inc Financial News (NASDAQ GOOG)

Touching on a concern of many investors, operating expenses were generally ahead of Canaccord’s estimates. This was in part driven by higher headcount in the quarter mostly due to “opportunistic hiring.” This is the aspect of the relationship that has Canaccord questioning repeated excuses. “We note that this is the third quarter in a row (Google was) exhibiting operating expenses ahead of our and consensus estimates, and that management keeps referring to these expense increases as ‘temporary,’” the report noted.

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