Two Very Different Takes on Baidu

It is always interesting when you see opposite views from professionals when they both have access to the same news. Baidu was raised to Buy from Hold with a $238 price target at Stifel Nicolaus. Baidu was downgraded to Equal Weight from Overweight at Morgan Stanley, with an implied price target just under $180 on the ADRs.

So, is a tie-breaker needed to determine what is good or bad? Merrill Lynch maintained its Buy rating and maintained its $199 price target. The firm said:

Revenue growth was strong, with mobile up to 20% of total sales in the fourth quarter on back of 35%+ of total traffic from mobile. Investment continues to pick up in 2014 as co expands mobile user base ahead of competitors and develops new verticals. Capex has been less than feared despite lowered near-term earning estimates. Mid-term growth is expected to be stronger.

Pacific Crest Securities maintained its Outperform rating and raised the target price to $220 from $195, while Goldman Sachs maintained its Buy rating and trimmed the target to $215 from $220.

24/7 Wall St. is a bit relieved to see that the Baidu news was not bad. When the company finally got around to releasing the formal date that it would release its earnings, it was far later than we and others had expected. With all the news flow that was coming out of China around that time, we worried that something not so good was being held back to avoid releasing bad news during a possible mini market meltdown.

Baidu shares are still up 2.5% at $177.25 after the earnings report. That is good, but the stock was trading higher than the 52-week and all-time high of $185.50 last night.

Sometimes the same sort of people with the exact same information just come up with different conclusions. Baidu’s reaction is far from being one of a hanging chad, but it is also far from an overwhelming boost as well. All of this has to leave many of the “Baidudians” wondering what to do from here.