Over the past few months, Baidu (BIDU-NASDAQ) saw its stock price plunge from over $270 to under $230 before climbing above $240 yesterday. Following better than expected Q3 results but a less than stellar Q4 guidance, some institutional investors have reduced their positions as the likelihood of a material earnings beat continuing from the disposal of the delivery business was lower than expected for some. We believe given the pull-pack in the stock and the recent increase in buying, we believe now is a good time to re-enter the stock. The guided revenue for Q4 2017 accounts for the spinoff of its food […]
Travis Zhou
4 posts
Baidu’s (BIDU-NASDAQ) stock price has reached our fundamental price target of $268. As a result we are closing our buy recommendation on the stock. We now believe the Q3 EPS beat is largely priced in – We started coverage of Baidu (BIDU-NASDAQ) on September 3rd with a buy recommendation. Our bull thesis was that we expected Q3 adjusted EPS and Q4 guidance to materially beat consensus, driven by the spinoff of its money-burning Takeout Delivery business. These operating losses were not being fully accounted for in the share price in our opinion. BIDU is up 16% since Perspectec launched coverage with a Buy […]
We look at Baidu’s VIE corporate structure and attempt to quantify the takeover, bankruptcy and dividend risks to holder’s of BIDU on the NASDAQ. In this paper we attempt to quantify a reasonable discount to BIDU-NASDAQ given that, similar to other Chinese internet companies, it is essentially a shell company with much of its revenues being indirect. For some background, PRC laws and regulations restrict foreign investment in the internet, value-added telecommunication-based online advertising, online audio and video services and mobile application distribution businesses. In order to bypass these restrictions, Chinese companies in these industries, including Baidu and Alibaba, have adopted a mechanism called […]
Introduction: The is the first in an ongoing series of research pieces examining Baidu’s (BIDU-NASDAQ) business and share price. The goal of our research is to understand the future direction of BIDU’s share price relative to its peers and the NASDAQ composite. The main criteria that will determine the future share price of BIDU we believe is: 1) Anticipating the EPS over the next few quarters and 2) Recognizing a change in value on a sum-of-the-parts basis Sum-of-the parts valuation works best – The primary driver to Baidu’s EPS and stock price is its search service operating margin. This division has […]