Goldman Sachs Raises its Price Target on Baidu.com (BIDU) to $128
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Price: $91.40 +0.89%
Rating Summary:
30 Buy, 10 Hold, 4 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 3 | Down: 5 | New: 34
Rating Summary:
30 Buy, 10 Hold, 4 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 3 | Down: 5 | New: 34
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CONTRIBUTOR http://notablecalls.blogspot.com
Goldman Sachs is positive on Baidu.com (NASDAQ: BIDU) raising their 12-month price target to $128 from $93 due to higher expectations for margins despite slightly lower revenue. Specifically, the firm is raising their 2007/2008 EPS by ~15% and increasing their long-term growth rate to 30% from 25% as they believe that the competitive landscape and investments will pressure margins less than they had modeled. Firm still estimates some margin contraction in 2007 (150 bps) while margins could be flat to up excluding the impact of the Japan investments.
While Baidu will continue to face near-term execution challenges in the transition to a direct sales force, firm's increased growth rate over the long-term reflects their view that investments and the competitive environment (primarily from Google and Yahoo!) are not expected to increase to the degree that they had forecasted in our margins, and Baidu is likely to maintain/gain share. Firm believes that 15%-plus upside to consensus 2007 and 2008 EPS driven by margins will continue to support the shares despite the expected topline weakness in the near-term. They do not expect the recently announced MSN deal to have a material effect in the near term due to MSN's minimal share of the Chinese search market.
Notablecalls: Well, Stevie will be happy! As BIDU is a mover and GSCO sure has the power to move it ..expect to see a move in the pre mkt.
http://notablecalls.blogspot.com
Goldman Sachs is positive on Baidu.com (NASDAQ: BIDU) raising their 12-month price target to $128 from $93 due to higher expectations for margins despite slightly lower revenue. Specifically, the firm is raising their 2007/2008 EPS by ~15% and increasing their long-term growth rate to 30% from 25% as they believe that the competitive landscape and investments will pressure margins less than they had modeled. Firm still estimates some margin contraction in 2007 (150 bps) while margins could be flat to up excluding the impact of the Japan investments.
While Baidu will continue to face near-term execution challenges in the transition to a direct sales force, firm's increased growth rate over the long-term reflects their view that investments and the competitive environment (primarily from Google and Yahoo!) are not expected to increase to the degree that they had forecasted in our margins, and Baidu is likely to maintain/gain share. Firm believes that 15%-plus upside to consensus 2007 and 2008 EPS driven by margins will continue to support the shares despite the expected topline weakness in the near-term. They do not expect the recently announced MSN deal to have a material effect in the near term due to MSN's minimal share of the Chinese search market.
Notablecalls: Well, Stevie will be happy! As BIDU is a mover and GSCO sure has the power to move it ..expect to see a move in the pre mkt.
http://notablecalls.blogspot.com
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