Wall Street Chimes In On Baidu's (BIDU) Blow-Out Q4

A number of Wall Street's finest are commenting on Chinese search giant Baidu, Inc. (Nasdaq: BIDU) today after the company reported blow-out fourth quarter results and provided a better than expected outlook after the close. Baidu reported Q4 earnings of $1.88 per share, 20 cents better than the market consensus of $1.68 per share, and up 48.2 percent from the same quarter last year. Revenue for the company was $184.7 million, up the 39.8 percent from the $132 million in the same quarter last year. Analysts had expected revenue for Baidu in the quarter at $180 million. Shares of Baidu are up 8.6% in early trading.

• Goldman Sachs: Solid guidance for a seasonally weak qtr suggests advertisers are responding positively to the new bidding system, and consensus for 2010 and 2011 appears materially too low. Expenses exceeded estimate but do not unduly concern, given several non-recurring items in 4Q2009 (office relocation, 10th anniversary celebration, Baidu Professional transition). Reiterate Buy rating, raises price target from $550 to $575.
  
  
• Susquehanna: "A beat and raise - Baidu's 4Q earnings results yesterday have sent a bullish message on its shares. Investors should pay attention to the company's record-high cash flow generation. The transition to the Phoenix Nest (PN) system has been better than expected, especially benefiting large ad customers. eCommerce fits well in the context and represents a significant driver. Baidu remains as a secular growth story in the Chinese Internet industry." Reiterate Positive rating, raises price target from $520 to $540.
  
  
• Kaufman Bros: "BIDU reported 3% upside to 4Q revenue operating income...Gross revenue of $185M (40% Y/Y) vs. Street at $180M, due to better-than-anticipated adoption of Phoenix Nest... 1Q10 revenue guidance of $176M-$181M (down 2%-5% Q/Q) vs. Street at $169M, due to better 4Q and PN transition...Increase 2010 Revenues and PF EPS by 4%" Maintain Hold rating, raises price target to $540.
  
  
• Piper Jaffray: "Last night, Baidu delivered above-expectation December quarter results and March quarter guidance. The company guided the midpoint of March revenue to $178M, above the Street at $170M. Baidu management mentioned this guidance does not factor in the potential revenue from Google shutting down google.cn, but suggested they expect to benefit if Google.cn shuts down." Maintain Neutral rating, raises price target from $315 to $454.
  
  
• Deutsche Bank: "The earnings surprise was largely due to 1) lower than expected SG&A and 2) other income of RMB28m, which we believe is related to govt subsidies...Active advertisers in 4Q09 totaled 223k, up 13% YoY and 3% QoQ. We believe the sequential growth proves that Baidu new customer acquisition was smooth in Oct and Nov...we think margins in 1Q10 could improve YoY, given the substantial marketing campaign launched in 1Q09 to recover brand image." Maintains Buy rating, $604 price target.
  
  
• Morgan Stanley: "What we liked: 1) Paying customers and ARPU (average spending per customer) rose 13% and 24% YoY each. Notably, Baidu’s total paying customers account for less than 1% of total SMEs in China. 2) Sales from Baidu Union outpaced its “organic” paid listing sales (+50-60% YoY, vs 20-30%, on our estimates). 3) Baidu has attracted more large corporate customers for paid listings, who often spend significantly more than SMEs. 4) Baidu offered strong 1Q2010 guidance, with sales likely up 48-52% YoY...What concerned us: 1) Japanese venture trimmed Baidu's earnings by 10%. 2) ARPU dipped 3.4% QoQ, affected by the customer transition to Phoenix Nest." Maintains Equal-Weight rating

Some others from around the Street:

• BofA/Merrill Lynch: Maintains Buy, raises price target from $480 to $545
  
• RBC Capital: Maintain Outperform, raises price target from $554 to $594
  
• JP Morgan: Maintains Overweight rating, raises price target from $460 to $540

UPDATE: Click here to see some highlights from Baidu's Q4 conference call.

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