Deutsche Bank Defends Baidu (BIDU) as CCTV Questions Oversight of Ads

Shares of Baidu (Nasdaq: BIDU) are slumping for the second day in a row Tuesday after China's CCTV said the company lacks oversight on its advertisers. The stock fell 3.7 percent on Monday and is down another 5.2 percent heading into Tuesday's afternoon session.

While an analyst at JPMorgan said sales over the short-term may be impacted, analysts at Deutsche Bank took the other side of the trade and defended the stock this morning.

Deutsche said, "We expect the exposure by CCTV to have little impact on Baidu's operations and financials. We believe the CCTV report is not motivated by the government. We believe Baidu has established a strong relationship with a broad range of govt bodies, which is evidenced by six ministry-level govt bodies joining hands with Baidu in Sunshine Action, an initiative to clean-up fraudulent advertising."

Deutsche Bank maintains its Buy rating and $190 price target on shares of Baidu.

The initial reports stemmed from a CCTV article which said Baidu allowed forged medical enterprises to list ads on its site. Sources also suggested these advertisers are able to improve their key word rankings by boosting bid prices.

Shares of Baidu last traded at $137.05.

For more ratings news on Baidu click here and for the rating history of Baidu click here.

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