Baidu (BIDU) Buy Reiteated at Jefferies Following Chinese Medical Ad Probe

Jefferies analyst, Karen Chan, noted that Chinese authorities have launched an investigation into Baidu (NASDAQ: BIDU) over a student’s death. Chinese authorities, including Cyberspace Administration of China, State Administration of Industry and Commerce and the National Health Commission, have launched an investigation into Baidu’s medical advertisements over the death of a university student who unfortunately passed away after seeking cancer treatment at a hospital using Baidu’s search engine. The incident has received strong media attention and stirred public opinion.

Baidu has been the target of multiple online medical ad controversies including CCTV’s report regarding medical companies without proper licenses advertising on Baidu’s paid search listings back in 2008. The company has adopted corresponding measures over the past years including Plus V customer verification program, standards of certification, and screening of potentially misleading ads. Investigations regarding which parties involved (i.e. the hospital, Baidu) should be held accountable are still ongoing and we would await more color from the company and the government in addressing public concerns given that medical is an important vertical of high sensitivity.

No change to Buy rating or PT of $225 based on SOTP including USD182/ADS in core search; USD13/ADS in Ctrip’s stake; USD6/ADS in iQiyi; USD9/ADS in O2O and USD14/ADS of net cash.

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 $178.91 yesterday.

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