Can Q4 Earnings Breathe Life Into Baidu (BIDU) Stock

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Chinese internet company Baidu (BIDU) reports fourth-quarter results February 21. The company will report after the market close with the consensus calling for earnings of $1.79 per share on sales of $3.88 billion. During the same period last year the company earned $2.29 per share and had sales of $3.62 billion.

Technical Analysis

BIDU was recently trading at $172.30 down $111.92 from its 12-month high and $18.52 above its 12-month low. InvestorsObserver’s Stock Score Report gives BIDU a 22 long-term technical score and a 21 short-term technical score. The stock has recent support above $160 and recent resistance below $174. Of the 12 analysts who cover the stock 7 rate it Strong Buy, 0 rate it Buy, 5 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, BIDU gets a score of 42 from InvestorsObserver’s Stock Score Report.

Analysts' Thoughts

BIDU stock has shown a lot of weakness over the last year and while shares appear to have hit a bottom at the start of the year the stock has yet to make a meaningful recovery. The company has a solid record of posting big positive earnings beats, but the positive reports have not been enough to outweigh concerns over slowing economic growth in China and falling earnings for Baidu in particular.

The market expects another positive earnings surprise, with a whisper number of $1.90 for the quarter. Should the actual number fall in-line with the whisper it would translate to a year over year profit drop of 17 percent. The drop in profit has already been priced into the stock, and on its own would not result in a selloff, but should the company fail to hit the whisper number the selloff could be steep. The market is already very jittery over China in general, and it would be quick to dump BIDU on any signs of additional weakness. However, the upside on a strong set of quarterly numbers on both the top and bottom line could be huge as analysts have an average price target of $216.64 on the stock.

About Baidu Inc.

Baidu is the largest Internet search engine in China with mid-70s mobile traffic share in the search market. The firm generates 86% of revenue from online marketing services and the rest from other segments. Baidu is a technology-driven company and has been investing in AI technology, such as autonomously driven cars.

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