Earnings Preview: Baidu.com (BIDU, GOOG)

On Wednesday afternoon, we’ll get to see earnings out of Baidu.com, Inc. (NASDAQ: BIDU). The estimates from First Call for the Chinese internet search engine were $0.71 EPS on $76.83 million in revenues.  Next quarter’s revenue estimates are almost $77 million.  Estimates for fiscal 2008 are $4.13 EPS on $432.35 million in revenues.  Last quarter, the company gave guidance of $74.7 million to $76.7 million in revenues and EPS targets around the time were $0.70 EPS.

Analysts have an average price target north of $382, which is still more than 50% higher than today’s prices.  Baidu’s chart hasn’t been a pretty one over the last 60-days.  Over recent days the stock did bounce off of a $222+ level, although it is now under its 200-day moving average of $252.76.  If options prices stayed static from here, it appears that options traders would currently be factoring in a move of $14.00 to $18.00 in either direction.  We would expect this number to change by Wednesday.

Recently the entire China play and the entire Internet play has come under pressure after a long period of euphoria.  Baidu does usually exceed estimates, although its pattern is hard to peg.  Recently we noted how it was in the same soup as Google (NASDAQ: GOOG) and others, yet we recently noted how its market share in search puts it in a precarious spot.  Even the beloved Google recently followed the Internet sell-off trend.  With roughly an $8 Billion market cap this one still trades at more than 18-times 2008 revenues, so even though the stock is way off highs it is hard to call the stock cheap by even Chinese and internet measures.  The company did also recently lose its CFO after he died in an accident over the Christmas holiday.

Baidu.com closed up marginally at $233.91 on Friday and its 52-week trading range is $92.80 to $429.19.

Jon C. Ogg
February 9, 2008