Boston, MA 02/27/2014 (wallstreetpr) – Baidu Inc (ADR) (NASDAQ:BIDU), a dominant search engine provider in China, released its fourth quarter earnings yesterday after the close of the trading session. Baidu proved its performance in the quarter by beating both revenue and earnings per share target set by the Wall Street analysts.
An Upside Fourth Quarter Results
Baidu Inc (ADR) (NASDAQ:BIDU)’s revenues for the quarter increased 50.4% year-over-year to RMB 9.52 billion, higher by RMB 290 million set by the analysts. Its EPS for the fourth quarter stood at $1.39 per share v/s $1.37 per share estimate of the street. The upbeat results were driven by 34.8% year-over-year increase in revenue per online ad customer to $3,452.In revenues, mobile contributed 20% of the total revenue. However, its operating profit declined 3.8% due to higher operating expenses as compared to the previous year, to RMB 2.7 billion, which is 13% below the market consensus.
Also, the management noted that it is willing to forego profits in the first year as the year marks the investment period for the company to help its business shift smoothly to the mobile internet platform, while it also eyes other bunch of new product offerings.
For the first quarter, the company expects revenue to reach levels in the range of RMB9.24 billion to RMB9.52 billion ($1.526B-$1.573B), which is higher than the market consensus of RMB8.67B ($1.43B).
Analysts Put Cautious Approach
Inspite of a pretty decent fourth quarter earnings and an optimistic first quarter outlook, analysts at Morgan Stanley stands to take a careful view on the company. As eventually, the management has projected no profit for the year, essentially implying that the margins for the year 2014 is set to drop by additional 11-12% raised concerns among the research firm’s analyst Philip Wan and Timothy Chan. Resultantly, they have downgraded the rating to ‘Hold’ now and set a price target of $179.6 fot it. They do not see a further rating downgrade as the long term prospects of the search engine company looks positive to them and they noted that the rating could be revised if margins show improvement.
On the contrary, Stifel’s analysts have revised their price target and rating upward to $238 and ‘Buy’ respectively, attributed to the expected lift in the mobile queries and mobile search ad prices, which are higher at 60% as against PC search prices. Apart from this, speculations are high that Baidu Inc (ADR) (NASDAQ:BIDU) will be replicate its merger and acquisition record this year as well, following the statement from its CEO Robin Li.
