(Reuters) - Citigroup added Google Inc and Time Warner Inc to its top picks live list, based on the search engine giant's near- and long-term outlook and a possible sale of Time Warner's AOL advertising and dial-up businesses.

The brokerage has a "buy" rating on Google, which replaces Expedia Inc as its No. 1 choice for the top picks live list -- Citigroup's list of stocks to buy or sell Monday.

Analyst Mark Mahaney said Google was on track to meet his second-quarter estimates for the company and the 12-month outlook for the "PC Search" industry remains robust.

Google, which is also Citigroup's top Internet pick, has significant long-term option value with its mobile search and display advertising revenue streams and a highly favorable risk-reward outlook, the analyst said.

Expedia faces weakening economic and travel trends in Europe, which accounts for 20 percent of its bookings and has been its biggest growth area, and increasing search advertising competition from direct travel suppliers, Mahaney said.

The analyst cut his price target to $31 from $37 for Expedia, while maintaining his "buy" rating on the stock.

Analyst Jason Bazinet, who has a "buy" rating on Time Warner, said there are potential catalysts for the company, including a possible sale of AOL's advertising and dial-up businesses and a structural separation of the cable unit, through the end of this year.

He has a price target of $25 on the stock of Time Warner, which is Citigroup's top pick among large cap stocks in its coverage universe.

Bazinet said a recent filing from Yahoo suggests it may be interested in pursuing a deal, including a potential acquisition of the AOL advertising business.