Wednesday, Benchmark, a financial analysis firm, reduced its stock price target for Baidu (NASDAQ:BIDU) shares to $135 from the previous $180. Despite this adjustment, the firm maintained its Buy rating on the stock. The revision comes ahead of Baidu's second quarter earnings report, scheduled for August 22, 2024.
The analyst at Benchmark cited weaker-than-expected advertising growth in the quarter as the primary reason for the price target reduction. The firm's research indicated that Baidu faced increased growth pressure on its advertising revenue due to a combination of soft macroeconomic conditions and the company's decision to integrate more GenAI content into its search results. This strategic move has reportedly led to a temporary setback in monetization due to reduced advertising inventory.
Benchmark's revised forecasts reflect not only the anticipated performance for the second quarter but also adjustments to their full-year 2024 estimates for Baidu. The lowered expectations are based on the belief that the challenging macroeconomic environment and Baidu's business strategy will persist in the near-term quarters, potentially affecting the company's financial outcomes.
The firm's announcement today underscores the challenges Baidu is facing in balancing its long-term strategic initiatives with short-term revenue generation. Benchmark's revised price target of $135 takes into account both the lowered earnings estimates and a reduction in the multiple used to value the company's stock.
Investors are expected to closely monitor Baidu's upcoming earnings report to gauge the impact of the issues highlighted by Benchmark on the company's financial health and future growth prospects. The new price target of $135 set by Benchmark reflects the current analysis and outlook for the company as it navigates through these industry and internal challenges.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.