Baidu pares gains on margin worries. More acquisitions eyed.


Citing concerns about a soft 2014 margin outlook (the result of aggressive investments), Morgan Stanley has cut Baidu (BIDU +2.3%) to Equal-Weight in spite of its Q4 beat and strong Q1 guidance. Shares have given back a large chunk of yesterday's AH gains.

Stifel, however, has upgraded shares to Buy and lifted its PT to $238. It expects Baidu's mobile queries will grow to account for over half its total queries in 2014, and notes mobile search ad prices (CPCs) are now at 60% of PC levels (up from 55% in Q3).

The firm forecasts 53% and 49% revenue growth in 2014 and 2015, respectively. Adjusted EBITDA is only expected to rise 9% in 2014, but growth is expected to surge to 51% in 2015.

Maxim notes mobile's revenue share doubled from Q1 to Q4, and Goldman observes Baidu's app stores, locked in fierce competition with Qihoo (QIHU +2.2%), have a 41% share of Chinese app distribution, per research firm Analysys.

CEO Robin Li suggested on the CC (transcript) Baidu, which made a string of big acquisitions in 2013, is open to more M&A in 2014. He also claimed over 60% of mobile ad customers now have a mobile-optimized landing page.

From other sites
Comments (1)
  • samuel_liu
    , contributor
    Comments (2753) | Send Message
     
    http://bit.ly/1ccEUb2
    Shift to mobile Internet hits Baidu profit
    Associated Press By JOE McDONALD
    BEIJING (AP) — Baidu Inc., which operates China's leading search engine, said Thursday its quarterly profit edged down 0.4 percent as it spent heavily to promote mobile services amid an industrywide scramble to keep up with users who increasingly surf the Web on smartphones.
    27 Feb 2014, 01:00 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs