Baidu (BIDU) Price Target Trimmed to $215 at Goldman Sachs; Stock Remains Buy-Rated

February 27, 2014 9:23 AM EST Send to a Friend
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Price: $219.26 -1.39%

Rating Summary:
    21 Buy, 1 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 29 | Down: 28 | New: 24
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Goldman Sachs maintained a Buy rating on Baidu (NASDAQ: BIDU) and reduced its price target to $215.00 (from $220.00). The change follows Q4 results and expectations for increased spending. Analyst Piyush Mubayi thinks investors should Buy Baidu on continued dominance of traffic, and visible long-term earnings trend.

"Mobile search: The guidance midpoint implies 57% yoy revenue growth, accelerating from 42%/50% in the past two quarters, mainly driven by the growing mobile contribution (20% of rev in 4Q, predominantly from search, on a cost-per-click that is 60% of desktop)," said Mubayi.

"Consumer products: Baidu app store and 91 Wireless combined represented 41% share of mobile app distribution in 4Q. Accelerating revenues have provided Baidu with incremental bandwidth to invest. We now model 26% operating margin for 2014E, 10pp yoy decline, to reflect higher marketing investment to promote products in strategic categories (map, travel, video). We expect spending to stabilize as smartphone sub growth passes the current peak. We lower our 2014E-16E EPS (Rmb) by 21%/17%/14% to incorporate spending, and thus lower our 18-m target price to $215 from $220 (1.0X unchanged PEG off 29% 2014E-17E earnings CAGR)," he added.

For an analyst ratings summary and ratings history on Baidu click here. For more ratings news on Baidu click here.

Shares of Baidu closed at $172.90 yesterday.


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