Baidu (BIDU) Off Highs After Forecast Beat

NEW YORK (TheStreet) -- Baidu (BIDU) shares jumped 6% in morning trading on its earnings report a day earlier before losing ground. At midday, the Chinese-language search engine had gained 2.3% to $162.99.

For the fourth quarter, Baidu said revenue was expected between $1.51 billion and $1.55 billion, higher than an anticipated $1.46 billion consensus among analysts surveyed by Thomson Reuters.

The Beijing-based company reported third-quarter earnings of $1.48 a share and revenue came in 42.3% higher than the year before to $1.45 billion. Revenue per online ad customer was $3,121, an 18.6% quarter-on-quarter gain and up 19.4% year over year.

"We were pleased to see strong results in the third quarter as revenue remained on a solid growth trajectory," said CEO Robin Li in a statement. "Mobile search revenues in particular continued to grow at an exciting pace as more of our customers recognize the benefits of mobile marketing on the Baidu platform."

Jefferies upgraded the stock to "buy" from "hold," revising its price target to $222 from $153.

"Our checks indicate increasing mobile search demand and incremental mobile ad budget from Baidu's customers," the investment firm wrote in its report. "We believe Baidu's new product launches and strong monetization capability will deliver further revenue upside."

TheStreet Ratings team rates Baidu Inc as a Buy with a ratings score of B+. The team has this to say about their recommendation:

"We rate Baidu Inc (BIDU) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

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