BANGALORE: Google shares have fallen by 5 percent in the past year, as earnings have been lower than expected for at least two years, and investors see other companies as having more potential in the digital advertising space.

However, a few analysts at the top investment banks think the gloominess is largely unfounded.

Marketwatch.com has compiled some insights on how Google can grow its P/E ratio from two of them, Justin Post of Bank of America and Eric Sheridan from the Union Bank of Switzerland (UBS).

Google is too dependent on search advertising

Google’s main source of revenue is its search advertising business, and UBS’s Sheridan thinks that this could be a major liability. Fortunately, Google has other advertising technologies catered to display. Sheridan believes the impact on the companies’ profits will be minimized if it ramps up revenues from its display products like YouTube.

Also of concern to investors is an upcoming renegotiation for the contract between Apple and Google that makes Google search the default option on the iOS platform.

Google was recently replaced by Yahoo as the default for the Firefox browser; however, Bank of America’s Justin Post thinks the contract is very unlikely to be changed.

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