S&P Equity Research Downgrades Baidu.com (BIDU) to Sell

April 25, 2008 1:18 PM EDT

S&P Equity Research downgrades Baidu.com (Nasdaq: BIDU) from Hold to Sell.

S&P analyst, S. Kessler, says, "BIDU posts Q1 per-ADS profit of $0.60 vs. $0.32, $0.08 below our forecast. Revenues rose 108%, above our estimate, on continuing gains in the number of customers and revenue per client. But we have concerns about margins, hurt by growing traffic acquisition costs and notable spending on sales and R&D. We are cutting our '08 per-ADS earnings projection to $3.68 from $3.91, but raising our '09 estimate to $6.30 from $5.88 on moderating investment growth. Based on revised peer analysis, we are lifting our target price to $350 from $300, but see BIDU as overvalued at current prices."

Baidu.com, Inc. (Baidu) is a Chinese-language Internet search provider. The Company conducts its operations principally through Baidu Online, its wholly owned subsidiary in Beijing, the People’s Republic of China.[SM]

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