Baidu Spikes as Goldman Turns Bullish

December 16, 2008 at 11:07 am PT

Baidu (BIDU) shares have spiked today, after Goldman Sachs analyst James Mitchell raised his rating on the stock to “Conviction Buy” from Neutral, while maintaining his recently reduced $145 price target.

Mitchell offers a variety of reasons for his more bullish posture on the Chinese search engine:

• He observes in his research note that the stock now trades at just under 20x 2009 estimated non-GAAP earnings.
• He notes that paid search is just two basis points of GDP in China, versus 9-12 basis points in developed search markets.
• Mitchell sees search spending climbing at about 30 percent a year in China for several years and believes Baidu can maintain query share–with government help and consumer loyalty–giving the company 30 percent revenue and EPS growth.

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Tagged with: Baidu, Barrons, Chinese, Eric Savitz, frontpage, Goldman Sachs, James Mitchell, search engine, search markets, search spending, Tech Trader Daily

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