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(Recasts; adds details) Dec 3 (Reuters) - Bank of America slashed its price target by 23 percent on the shares of Google Inc (GOOG.O) and cut its fourth-quarter and 2009 profit estimates for the Internet search giant to reflect an increasingly negative outlook for global advertising.
Recent weakness in online retail and travel sectors, two of the largest categories in search, will likely have a dampening effect on costs-per-click as advertisers decrease their search advertisement spend, the brokerage said. E-commerce in the United States fell 4 percent in the first 28 days of November after growing roughly 1.3 percent in October, BofA said, citing data from tracking firm comScore SCOR.O. This confirms investor fears that retailers face an extremely challenging fourth quarter, the brokerage said.
As e-commerce sites see declining traffic, search players such as Google, Yahoo Inc YHOO.O and Microsoft Corp (MSFT.O) will likely see a reduction in commercial queries, the brokerage wrote in a research note.
In the travel category, revenue per available hotel room in the United States fell 17 percent in the first week of November after a 7 percent fall in October, according to hotel industry tracker Smith Travel Research, the brokerage said.
September U.S. airline revenue was down 7 percent to 8 percent, and has been declining each month since the end of last year by 1 percent to 3 percent, Bank of America added.
"We see consumers still searching online, but for news and political commentary rather than HDTVs, Blu-Ray players and PCs," the brokerage said.
Bank of America cut its price target on Google shares to $500 from $650. It lowered its profit view for the fourth quarter to $4.74 a share from $5.24, and for 2009 to $21.45 a share from $22.79.
"However, we expect Google to reign in expenses during this period, which partially offsets the decline in EPS," said BofA, which kept a "buy" rating on the stock.
Google shares closed at $275.11 Tuesday on Nasdaq. (Reporting by Amiteshwar Singh in Bangalore; Editing by Himani Sarkar)