Baidu Inc, a leader in the Chinese search industry in terms of user market share, reported better-than-expected revenue in the first quarter, largely driven by cloud and artificial intelligence businesses, sending its shares up over 4% on Tuesday.
The Chinese tech giant said its total revenue surged 25% to CNY28.13 billion, largely driven by non-advertising revenue which grew 70% year over year. That beat the Wall Street consensus estimates of CNY27.25 billion.
For the second quarter of 2021, the dominant Chinese internet search engine company forecasts revenues in the range of CNY29.7 billion CNY32.5 billion, representing a growth rate of 14% to 25% year over year, which assumes that Baidu Core revenue will grow between 20% and 33% year over year. This guidance does not include a potential contribution from the acquisition of YY Live.
Following this, the U.S. listed Baidu stock rose over 4% to $197.72 on Tuesday. The stork slumped 11% so far this year.
Analyst Comments
“Baidu reported 1Q results with revenue and non-GAAP earnings ahead of consensus. For Baidu core, revenue came in better than our expectations and in line with guidance, while non-GAAP op margin came in ahead of our estimates. The mid-point of Baidu 2Q total revenue guidance is ahead of consensus. For IQ, revenue and earnings beat expectations, and mid-point of 2Q revenue guidance are inline,” noted Thomas Chong, equity analyst at Jefferies.
Baidu Stock Price Forecast
Sixteen analysts who offered stock ratings for Baidu in the last three months forecast the average price in 12 months of $351.36 with a high forecast of $407.00 and a low forecast of $280.00.
The average price target represents an 82.34% increase from the last price of $192.70. Of those 16 analysts, 14 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price to $300 with a high of $390 under a bull scenario and $160 under the worst-case scenario. The firm gave an “Equal-weight” rating on the Chinese Internet giant’s stock.
“Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” noted Gary Yu, equity analyst at Morgan Stanley.
“Our price target reflects materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from the competition. The company is well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 18x consensus 2022e non-GAAP P/E vs. the historical 11-24x trading band since 2019.”
Several other analysts have also updated their stock outlook. CFRA cut the target price by $58 to $190. Loop Capital raised the price objective to $290 from $210. Baidu had its target price boosted by equities research analysts at Goldman Sachs to $385 from $383. Citigroup upped their target price on shares of Baidu to $324 from $292.
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This article was originally posted on FX Empire
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