Mastin thinks tomorrow’s report will “show only modest signs of improvement” over January’s data. Looking at Google’s overall volume of keyword searches, he sees a potentially disturbing statistic in that Google’s keyword searches rose only rose 26.4% in February, as comScore reported last week, compared to 36.9% in January. If comScore reports lackluster paid clicks for Google tomorrow, Mastin thinks a slowdown in advertising is likely a culprit. While comScore has stated that Google has been tweaking the algorithm it uses for counting paid clicks, Mastin says that’s not the whole story. Mastin said he surveyed a number of search-engine marketing firms, which follow the industry, and they mostly “acknowledged that they are seeing a slowdown that is more than normal cyclicality.”

He goes on, “A meaningful portion of the decline [in growth of paid clicks at Google] is probably also due to a maturation of the industry and/or the cyclical exposure of the sector given poor economic conditions.” Mastin believes there’s a chance Google will not make consensus estimates for $4.64 in EPS and $3.66 in revenue for the current quarter. Still, he has an Outperform rating on the stock and views it as an attractive investment “long-term” based on a P/E of 18 times next year’s estimated profit.