BIDU 3Q07 (8): Analysts Helped Baidu Rebound from After-Hour Drop
"Strong Buy" Rated U.S.-Listed Chinese Stocks (February 17, 2012)
Reversal from After-Hours Decline. Out of our expectation, Baidu (BIDU) shares surged 5.7% last Friday (Oct 26th) after Q3 earnings release. The night before, it declined 3.9% in the after-hours trading. What caused this reversal? We believe analyst actions played an important role.
Analyst Actions. On the morning of last Friday, 10 analysts published reports on Baidu's Q3 results (see table below). Here is a summary: 1) No upgrades or downgrades. 2) Five analysts maintained a positive rating; four maintained a neutral rating; one maintained a negative rating. 3) Five analysts raised their price target. Average price target was up 25% from $274 to $342; four maintained "No Target", one maintained prior target.
Table: Analyst Actions Following Baidu (BIDU) 3Q07 Earnings Report
| Company | Rating | Price Target |
| Bear Stearns | Maintained "Peer Perform" | Maintained "No Target" |
| CIBC World Mkts | Maintained "Sector Performer" | Maintained "No Target" |
| Citigroup | Maintained "Buy" | Raised from $250 to $425 |
| Credit Suisse | Reiterated "Underperform" | Raised from $143 to $196 |
| Goldman Sachs | Maintained "Neutral" | Raised from $185 to $310 |
| JP Morgan | Maintained "Overweight" | Maintained $400 |
| Morgan Stanley | Maintained "Equal Weight" | Maintained "No Target" |
| Piper Jaffray | Reiterated "Outperform" | Raised from $330 to $374 |
| RBC Capital Mkts | Maintained "Outperform" | Raised from $333 to $345 |
| Susquehanna | Maintained "Positive" | Maintained "No Target" |
Analysis. Although there were no upgrades, the average price target went up 25%. Half of the analysts remained bullish and half of the analysts raised price target. Overall, the bullish sentiment outweighed the bearish sentiment among analysts covering Baidu. Analysts' actions changed the market's previously bearish sentiment in after-hours trading to a bullish one in next-day regular trading. This is why the reversal happened.
What's Next. In the next article of our BIDU 3Q07 Series, we will analyze Baidu's performance between earnings releases, so that investors will have a better sense of how BIDU might perform before Q4 earnings.
(1): Baidu Maintained 4-1 Traffic Lead Over Google China
(2): Search Queries Increased 4% vs. Q2
(3): Baidu Expanded User Market Share to ~70%
(4): Baidu Has 2x Google China's Advertisers
(5): Historical Trading Pattern Reveals Key Metrics to Watch
(6): Baidu Q3 Revenue Estimated to Be $66.7M by Analysys International
(7) BIDU Will Likely Trade Down on Disappointing Guidance
(8) Analysts Helped Baidu Rebound from After-Hour Drop
Related: Latest Research on Baidu; Compare 19 China Internet Stocks
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