On Thursday, Tiger Securities adjusted its price target for Baidu (NASDAQ:BIDU) shares, a leading Chinese internet company, reducing it to $155.00 from the previous $160.00. Despite this change, the firm maintains a Buy rating.
The revision comes as Baidu prepares to announce its first-quarter earnings for 2024. Tiger Securities has revised its revenue predictions for the company, citing a weaker-than-expected economic environment in China. The firm now expects year-over-year growth of only 1.0% in Baidu Core's advertising revenue for the first quarter, a significant decrease from the previously estimated 6.0%.
The softness in key verticals such as real estate, automotive, and franchising has led to this conservative adjustment. In addition to advertising revenue, Tiger Securities has also scaled back its forecast for Baidu's Cloud revenue. The new estimate anticipates a 9% year-over-year growth, amounting to RMB 4.662 billion, which is a slight reduction from the earlier projection of 11% growth.
Furthermore, the firm has lowered its revenue expectations for Baidu's non-cloud Other businesses. It now projects a year-over-year decline of 10%, mainly due to a strategic review of Xiaodu, Baidu's smart device and hardware unit. This adjustment reflects the challenges Baidu faces in diversifying its revenue streams beyond its core advertising business.
InvestingPro Insights
As Baidu (NASDAQ:BIDU) gears up to release its first-quarter earnings for 2024, investors may find InvestingPro's real-time data and metrics to be particularly informative. Baidu's market capitalization stands at a robust $35.63 billion, reflecting the company's significant presence in the industry. The P/E ratio, a key indicator of a stock's valuation, is currently at 13.51, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at a slightly lower 12.82. This suggests that Baidu's stock may be reasonably valued in relation to its earnings.
InvestingPro Tips highlight Baidu's PEG Ratio for the last twelve months as of Q4 2023 at just 0.07, indicating potential for growth at a rate that could outpace its earnings, which is an attractive point for investors considering the company's future prospects. Moreover, Baidu has shown a solid revenue growth of 8.83% for the last twelve months as of Q4 2023, demonstrating its ability to increase earnings over time.
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