Baidu: Closer Look at the Stock of the Internet giant.

Baidu (BIDU) — “Chinese Google“. The company controls about 80% of the PRC search market.

Baidu’s business divides into three main segments – search services (76% of revenue), iQiyi video service (25% of revenue), and transactional services.

Why stocks are interesting

Revenues – in the second fiscal quarter, the company reported a 20.4% increase in revenue (YoY) to $ 31.4 billion. It was due to increased advertising sales and increased demand for cloud-based products based on artificial intelligence. As a result, Refinitiv’s forecast assumes a 10.6% increase in earnings per share on average per year for the next five years.

New Technologies – Baidu is developing an ecosystem of products. The key direction is the AI Cloud cloud platform. Baidu’s product suite includes Smart Mini Programs mobile app, DuerOS voice assistant, BJH content creator platform, and plans to acquire streaming technologies from YY Live. In addition, this year, it became known that the company, in partnership with electric vehicles of the BAIC brand, will release a new generation of Apollo Moon robotic taxis for mass production.

Multipliers – below the median values for the group of comparable companies.
Forward EV / Revenue (adjusted for income expectations) is 1.8 with an average of 5.4 for competitors.

The median target of analysts for 12 months. – $ 260. It suggests approximately 86% upside potential.

Technical picture – securities are in the area of horizontal support. Oscillator RSI (14) indicates that securities are oversold and is equal to 25. Resistance on the rebound is at $ 170.

Risks

Restrictive actions of regulatory authorities. The PRC authorities are concerned about the monopoly position of some tech companies, the security of users’ data, and ownership of subsidiaries.

High competition in the industry. The company’s main rivals are Tencent and ByteDance.

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