Baidu.com (BIDU): PT Cut To $213 At Macquarie On Slowing Growth And Margin Pressure

Macquarie analyst, Wendy Huang, reiterated her Outperform on shares of Baidu (NASDAQ: BIDU) but cut her price target to $213 from $261 after the company announced 4Q18 revenue that was 4% above consensus, driven by strong education and ecommerce advertising and iQiyi. Without iQiyi, Baidu Core revenue increased 14% yoy in 4Q18 but the analyst believes growth will decelerate to 8% YoY in 1Q19. Additionally, the continuing investment in new product, promotion and content, could cause a second hit to profits leading the non-GAAP operating margin to contract to 3% in 1Q19 and in turn, the PT reduction.

The analyst stated "The company will step up the spending on the red envelope promotion, S&M, traffic acquisitions and content and guides COGS and OPEX for Baidu Core will expand up to Rmb1.0bn QoQ in 1Q19. As such, we expect the 1Q19 Baidu Core’s non-GAAP OP to decline 46% QoQ to Rmb3.1bn".

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 $170.97 yesterday.

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