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Baidu Inc ADR - Stock Quote BIDU

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Morningstar's Baidu Inc ADR Stock Analysis

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Lowering Q2 2022 Estimates Due to COVID-19; Long-Term Drivers Intact, FVE Remains USD 183

Kai Wang, CFA Senior Equity Analyst

Analyst Note

| Kai Wang, CFA |

We revise our 2022 estimates downwards for Baidu to reflect further short-term COVID-19-related headwinds but our long-term investment thesis remains intact and fair value estimate is unchanged at USD 183. We are taking down Baidu Core growth to negative 1% from 7% year-on-year for second-quarter 2022, due to greater headwinds to its advertising business. We expect revenues to normalize in the back half of the year and should recover at the pace of China’s GDP growth. We anticipate that cloud revenue will also be affected as COVID-19 has prevented Baidu’s salespeople from finalizing contracts with potential clients. However, for both lines of business we believe the impacts are only for the near term and this also does not alter long-term views on artificial intelligence, or AI, or autonomous driving. With recent declines to Baidu’s stock price reacting to headlines related to the Shanghai lockdown, we believe that anymore pullbacks in valuation could present an attractive entry point as long-term drivers and thesis both remain intact.

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Baidu Inc ADR's Company Profile

Business Description

Baidu is the largest Internet search engine in China with 84% share of the search engine market in September 2021 per web analytics firm, Statcounter. The firm generated 62% of revenue from online marketing services from its search engine in 2020. Outside its search engine, Baidu is a technology-driven company and its other major growth initiatives are artificial intelligence cloud, video streaming services, voice recognition technology, and autonomous driving.

No. 10 Shangdi 10th Street, Baidu Campus, Haidian District
Beijing, 100085, China, People's Republic of
T +86 1059928888
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Dec 31, 2021
Fiscal Year End Dec 31, 2022
Stock Type
Employees 45,500

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