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 […]
Sum-of-the-Parts Valuation
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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 […]