Recently, foreign media once again focused on Baidu (Nasdaq：BIDU) and said that "Baidu is one of the most undervalued stocks in China’s Internet field." The report pointed out that many Wall Street analysts are optimistic about Baidu and have given a target price of $150. Leo Sun, an analyst at The Motley Fool, a well-known American financial information website, bluntly said that "Baidu is still one of the best technology stocks in China", and Daisy Galbraith, an analyst at New heater, even said that "it is time to pay attention to Baidu stocks".
Previously, affected by the epidemic, many Chinese stocks, including Baidu, once fell synchronously with the US stocks. Now, Baidu’s share price has slowly rebounded, and it is currently $101.79 per share. Although it has a certain decline compared with before, many analysts, including Deutsche Bank, have given good expectations for Baidu’s share price and think that this is a good opportunity to buy Baidu shares.
Deutsche Bank recently submitted an analysis report on Baidu, positioning Baidu’s rating as "holding". In the report, Deutsche Bank believes that the price of Baidu stock will reach $122 in the future. Compared with Deutsche Bank, JPMorgan Chase is more optimistic about Baidu’s future value-added space. In its latest research report, he pointed out that Baidu’s share price will reach $150 in the future. It is worth mentioning that JPMorgan Chase upgraded Baidu’s rating to "overweight" in March.
Coincidentally, Macquarie and Bernstein also estimated that the reasonable share price of Baidu should be around $150. Bernstein emphasized in the report that "Baidu deserves more love", and Baidu has also become one of the few rating companies in the agency during the epidemic.
Bernstein analysts pointed out that although Baidu’s market value is declining due to the epidemic, its fundamentals are improving, and its revenue, profit and other indicators are greatly improved.
According to the Q4 financial report released by Baidu in 2019, Baidu’s revenue was RMB 28.9 billion, up 6% year-on-year, far exceeding the market expectation of 2.5%. The net profit under non-GAAP reached RMB 9.2 billion, up 95% year-on-year.
In addition, the Bernstein research report also pointed out that Baidu has a cash flow of over $12 billion, and sufficient cash flow will become a powerful weapon for Baidu to resist the economic recession.
Therefore, Bernstein concluded: The epidemic will not have much impact on Baidu’s fundamentals. According to the risk assessment calculation, Baidu’s reasonable share price should be maintained at $150 when its core income increases by 2% this year and 13% next year, and it should also be at $126 when its income is less than expected. Bernstein believes that Baidu is currently one of the most undervalued stocks in the Internet field in China.
In fact, many institutional investors have already increased Baidu’s rating long before the research institutions upgraded Baidu’s rating. In February, the report of institutional investors holding Baidu shares showed that 330 institutional investors increased their positions in Baidu shares. In addition, 125 institutional investors have been added to Baidu stock, with a total shareholding of 5,324,751 shares.
Whether the brokerage institutions look at Baidu’s share price more or the institutional holders overweight Baidu, it shows investors’ recognition of Baidu’s future development potential to a certain extent. Wall Street analysts generally believe that the rebound in Q4 performance in 2019 is only the beginning of Baidu’s return to the upward trend.
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