On Thursday, US Tiger Securities maintained a Buy rating on Baidu (NASDAQ:BIDU) shares with a steadfast price target of $120.00. Currently trading at $81.13, InvestingPro analysis suggests the stock is undervalued, with a "GREAT" Financial Health Score of 3.07. The firm's analyst, Bo Pei, issued statements ahead of Baidu's fourth-quarter 2024 earnings, reiterating confidence in the company's stock while adjusting expectations for profit and margins. The revisions take into account increased costs and a one-time write-down associated with Jiyue, Baidu's electric vehicle joint venture.
The analyst expects Baidu Core's advertising revenue to fall by 8.0% year-over-year in the fourth quarter, aligning with the previously estimated decline of 3.5%. This projection comes as Baidu's overall revenue growth has slowed to 0.93% in the last twelve months. The forecast reflects the ongoing economic challenges in China during the period, which likely suppressed advertising demand. Additionally, the rise of less profitable AI-generated search results is believed to have further impacted the company's revenue streams.
Despite these challenges, the firm's outlook on Baidu remains positive, with no changes to the top-line estimates. The emphasis on the Buy rating indicates a continued expectation of Baidu's stock performance aligning with the firm's assessment.
The financial community will be closely monitoring Baidu's upcoming earnings report to gauge the actual performance against the projections made by US Tiger Securities. The report will provide insights into Baidu's financial health and the effectiveness of its strategies in navigating the current economic landscape.
Investors and market watchers alike are keen to see if Baidu's operational adjustments and its ventures, like the electric vehicle joint project with Jiyue, will bolster the company's position in the competitive tech and AI space. The maintained price target of $120.00 signals a belief in Baidu's potential for growth despite the short-term headwinds it faces.
In other recent news, Baidu has been the subject of numerous analyst adjustments. BofA Securities maintained a positive stance on Baidu, reaffirming a Buy rating and a price target of $104, despite a one-off cost impact from Jiyue Auto.
The firm anticipates a "2025 turnaround opportunity" for Baidu, reflecting confidence in the tech giant's future performance. Jefferies also maintained a Buy rating on Baidu and raised its price target slightly to $128, anticipating a narrowing decline in advertising revenue in 2025 due to strategic adjustments.
On the other hand, Bernstein, JPMorgan, and Susquehanna downgraded Baidu's stock to Neutral. Bernstein lowered its price target from $90.00 to $87.00, citing concerns over Baidu's ability to monetize AI capabilities effectively. JPMorgan also reduced Baidu's 2025 estimated adjusted earnings per share by 21%, positioning it 17% below the Bloomberg consensus due to uncertainties in macroeconomic recovery and potential negative effects on revenue from its AI content initiatives.
However, despite these downgrades, Mizuho (NYSE:MFG) Securities, Benchmark, and Tiger Securities maintained positive ratings, anticipating revenue growth re-acceleration in 2025. These recent developments highlight Baidu's ongoing commitment to AI and technology as it navigates a challenging macroeconomic environment. Baidu's AI Cloud business grew by 11%, and the company continues its share buyback program, with $161 million of shares repurchased since early Q3.
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