Baidu Inc, a leader in the Chinese search industry in terms of user market share, is expected to report its fourth-quarter earnings of $1.89 per share, which represents a year-over-year decline of nearly 40% from $3.08 per share seen in the same period a year ago.
However, the Chinese tech giant would post revenue growth of about 9% to $5.04 billion. The company has beaten consensus earnings estimates in most of the quarters in the last two years, at least.
“We maintain a “Buy” rating for Baidu (BIDU) with a target price of RMB 165. Our target price is based on the forward P/E of 18.48x and forward P/S of 0.42x for FY22. Non-GAAP EPS of RMB 56.59 ($8.98) for FY22. This provides an upside potential of 15% over the CMP of RMB 143.80,” noted Shejal Ajmera is founder and head of research at CrispIdea.
“We decrease our estimate for revenue growth to 14.3% from 19% for FY21 due to China’s low GDP growth. We estimate revenue growth of 10% for FY22 and 12% for FY23. We estimate EPS of RMB 56.19 ($8.87) and RMB 56.59 ($8.93) for FY21 and FY22, respectively.”
The U.S. listed Baidu stock traded 1.41% higher at $165.29 on Wednesday. The stock rose over 11% so far this year after slumping more than 30% in 2021.
Analyst Comments
“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. Our price target reflects materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from the competition,” noted Gary Yu, equity analyst at Morgan Stanley.
“The company appears well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 13x 2023e non-GAAP P/E, vs. the 10-30x trading band since 2018. Despite upside potential, we remain on the sidelines owing to near-term ad industry weakness, macro headwinds, and COVID-19 uncertainties.”
Baidu Stock Price Forecast
Nine analysts who offered stock ratings for Baidu in the last three months forecast the average price in 12 months of $259.00 with a high forecast of $330.00 and a low forecast of $175.00.
The average price target represents a 56.21% change from the last price of $165.80. All of those nine analysts rated “Buy”, according to Tipranks.
Morgan Stanley gave the base target price to $190 with a high of $370 under a bull scenario and $118 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the Chinese Internet giant’s stock.
Several analysts have also updated their stock outlook. Goldman Sachs cut the target price to $252 from $270. CFRA lifted the target price by $14 to $124. Susquehanna lowered the price objective to $175 from $200.
Technical analysis suggests it is good to hold for now as 100-day Moving Average and 100-200-day MACD Oscillator gives mixed signals.
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This article was originally posted on FX Empire
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