How Will Baidu (BIDU) Stock Respond to This Upgrade Today?

NEW YORK (TheStreet) -- Chinese Internet search provider Baidu Inc (BIDU) was upgraded to "buy" from "neutral" at UBS, and had its price target raised to $272 from $212.

Analysts at the firm cited expectations of better top line growth and an optimistic outlook on mobile monetization.

Shares of Baidu are slightly up 0.1% to $219.24 in pre-market trading.

 

Separately, TheStreet Ratings team rates BAIDU INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate BAIDU INC (BIDU) a BUY. This is driven by some important positives, 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, growth in earnings per share, increase in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BIDU's very impressive revenue growth exceeded the industry average of 43.6%. Since the same quarter one year prior, revenues leaped by 55.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BAIDU INC has improved earnings per share by 31.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BAIDU INC increased its bottom line by earning $4.96 versus $4.78 in the prior year. This year, the market expects an improvement in earnings ($36.37 versus $4.96).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Internet Software & Services industry average. The net income increased by 31.7% when compared to the same quarter one year prior, rising from $434.72 million to $572.56 million.
  • Powered by its strong earnings growth of 31.45% and other important driving factors, this stock has surged by 44.37% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • Despite currently having a low debt-to-equity ratio of 0.55, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.77 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: BIDU Ratings Report

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