Google Inc. (GOOG)Deutsche Bank, Jefferies raise price targets

After the close of trading July 16, Google Inc. posted second-quarter revenue growth of 5% -- a stark contrast from recent quarters with growth rates of 30% or more. Google reported its second-quarter profit rose 19% to $1.48 billion, or $4.66 per share, on the back of better cost controls and a lower tax rate. Adjusted profit of $5.36 per share topped the average estimate of $5.09 per share among analysts polled by Thomson Reuters.

During the quarter, Google faced "greater cyclical pressures from the economy and the online advertising sector than we had expected," wrote Deutsche Bank analyst Jeetil Patel in a July 17 research note.

Patel noted that international growth slowed considerably, and said the sluggishness could last until early 2010. He expects an overseas recovery to lag the U.S.

Despite a sluggish economy, Google still posts double-digit gains in paid click volume growth, Patel said.

He's bullish on the company in the longer term, saying that the stock deserves to trade at a premium because its annual profit growth outlook is nearly twice that of competitors'. Patel raised his price target to $475 from $425.

Jefferies analyst Youssef Squali also raised his price target, to $470 from $465, although he said the economy and seasonality should put pressure on Google in the second half of the year.

While Google's revenue growth was sluggish, he noted that there are early signs of recovery and stabilizing spending as large advertisers slowly re-enter the ad market.

Steel stocksKeyBanc Capital Markets issues favorable outlook for selected firms

A recovering economy in China, rising prices and easing inventory destocking are expected to help bolster earnings of steel companies despite numerous other troubles in the industry and U.S. economy, KeyBanc Capital Markets analyst Mark L. Parr said July 17.

Parr wrote in a client note that a "domestic resurgence" in China and increased prices for raw materials such as ferrous scrap and iron ore have sparked a rally in pricing of global flat-rolled steel -- a sheet-like product used in autos and appliances -- from a low point in the first half of the year.

He also said capacity utilization has improved at steel mills from below 40% to more than 50%, "with further upside to the 65% level still achievable."

"We sense these dynamics will support second half 2009 earnings upside despite ongoing end demand weakness, tight credit markets, rising unemployment and the new administration's reluctance to chum for job growth or stimulate tax relief," Parr said.

He favors AK Steel Holding Corp. (AKS), U.S. Steel Corp. (X), Olympic Steel Corp. (ZEUS), Steel Dynamics Inc. (STLD), and GrafTech International Ltd. (GTI).

Parr said he believes a recovery in profit will be more delayed for companies with more exposure to commercial construction markets. He cited Gerdau Ameristeel Corp. (GNA) and Reliance Steel and Aluminum Corp. (RS).

Tempur-Pedic International Inc. (TPX)KeyBanc Capital Markets reaffirms buy, raises price target SunTrust Robinson Humphrey maintains neutral

After the close of trading July 16, Lexington, Ky.-based Tempur-Pedic reported a profit of 22 cents per share, topping the 18 cents per share expected by analysts polled by Thomson Reuters.

Revenue fell 22% to $185.2 million, but beat Wall Street's $172.8 million forecast.

Bradley Thomas of KeyBanc Capital Markets boosted his share price target to $16 from $15, saying in a client note July 17 that the company "is positioned for strong gross margin improvement through the remainder of the year, with further upside potential should sales initiatives continue to benefit the top line."

Keith Hughes, an analyst with SunTrust Robinson Humphrey, said July 17 the company's results were better than expected.

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