Baidu (BIDU) Price Target Raised to $260 at Goldman Sachs

Goldman Sachs maintained a Buy rating on Baidu (NASDAQ: BIDU) and increased its price target to $260.00 (from $225.00). The change follows strong Q2 results.

"Mobile revenues exceeded 30% of Baidu’s total revenues in 2Q. Cost-per-click continues to rise, but remains at discounted levels relative to desktop, indicating further potential for pricing increases. The mobile search service recorded over 500mn monthly active users in June. On the back end, Baidu is (a) innovating deep learning technologies (e.g., set up a research center in California), which it expects to enhance the relevance between organic results and ad display, yielding better click-through metrics and (b) improving content quality by having vertical partners, such as Autohome and Bitauto, populate rich content to Baidu’s result page," said analyst Piyush Mubayi.

"A large number of mobile advertisers are adopting click-to-action solutions, which tie query to download and call activities to enhance marketers’ ROI. Map extends Baidu’s leadership in location-based services (LBS), with monthly active users surpassing 200mn in 2Q. Nuomi’s merchandise volume tripled and user base doubled since 4Q13, driving the monetization of LBS traffic. App distribution platforms (91 Wireless + Mobile Assistant) distributed a daily average of 130mn apps in 2Q. We raise 2014-16E non-GAAP EPS by 17-23% to reflect leverage in the cost lines, mainly pre-install spending. We accordingly raise our 18-month 1X (unchanged) PEG-based target price by 16% to US$260 (based on 29% 2014-17E EPS CAGR)," added the analyst.

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 $204.27 yesterday.

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