Baidu Spikes as Goldman Turns Bullish
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.
