Baidu Market Share Concerns Loom Ahead of Results

NEW YORK (TheStreet) -- Chinese Internet giant Baidu (BIDU) isn't letting Hurricane Sandy stop it, as the company is slated to report its third-quarter results later Monday.

Analysts polled by Thomson Reuters are looking for the Google (GOOG) competitor to earn $1.28 per share on just over $1 billion in sales. That's up 53.2% in the year-ago quarter, when Baidu generated $654.7 million in revenue, and earned 84 cents per share.

Baidu saw a 60% year-over-year jump in sales during the second quarter, when revenue totaled $858.8 million and earnings came in at $1.26 per share. At the time of its second-quarter release, Baidu forecast third-quarter revenue of $983 million to $1.01 billion.

As the Chinese population continues to surf the Internet, Baidu may have to worry about increased competition from the likes of Qihoo 360, says Raymond James analyst Aaron Kessler. In a recent research note, he said Baidu lost approximately 10% in market share from August 17 to 21, citing data from Hitwise Experian. Since then, Baidu has gained approximately 4% of that back, but there is still the concern, at least in the short-run.

"Despite near-term competitive challenges, we remain positive longer term on shares of BIDU and continue to believe the company is well-positioned for strong, long-term growth driven by Internet growth in China, increased e-commerce adoption, search advertiser adoption in China, and growth from nonsearch areas (e.g. mobile, display, video)," Kessler wrote in his note. He rates Baidu "outperform" with a $137 price target.

Like Google, the company it is most often compared to, Baidu also faces questions about mobile monetization as it expands its presence into mobile search and advertising. JPMorgan analyst Dick Wei cites mobile as one of his three primary things to look for in Baidu's report. Wei rates Baidu "overweight" with a $200 price target.

Shares of Baidu have underperformed the Nasdaq this year, falling 2.26% year-to-date, compared to a 14.68% return for the tech-heavy index.

Baidu plans to hold a conference call at 8 p.m. EST to discuss the results.

Interested in more on Baidu? See TheStreet Ratings' report card for this stock.

-- Written by Chris Ciaccia in New York.

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