Why Baidu Stock Is Down By 4% Today

Baidu Stock Retreats As Traders Focus On Soft Q3 Guidance

Shares of Baidu gained downside momentum and moved closer to multi-month lows after the company reported its second-quarter results. The company reported revenue of $4.85 billion and earnings of $2.39 per share, beating analyst estimates on both earnings and revenue.

While the report exceeded analyst estimates, the market focused on the soft guidance for the third quarter as Baidu expects to report revenue of $4.7 billion – $5.2 billion. Baidu stated that the current coronavirus situation in China remained uncertain, and it looks that this uncertainty has put some pressure on the company’s third-quarter guidance.

Baidu shares made an attempt to settle above the $355 level back in February but found themselves under huge pressure together with other Chinese stocks and declined towards the $160 level. The soft Q3 guidance and worries about coronavirus in China served as additional negative catalysts, and the stock is trending towards yearly lows at the $153 level.

What’s Next For Baidu Stock?

The main driver of Baidu’s share price perfomance after February 2021 was China’s crackdown on big tech companies. Regulatory risks in China are rising, so traders need strong catalysts to put their money into stocks of Chinese companies.

Unfortunately for Baidu, its second-quarter report did not serve as a positive catalyst due to the soft Q3 guidance. Currently, analysts expect that Baidu will report earnings of $11.41 per share in 2022, so the stock is trading at about 14 forward P/E. Such valuation levels do not look extremely cheap given the potential problems that big tech companies face in China.

In this light, Baidu shares may continue to drift lower until the company comes up with positive catalysts or the market sentiment towards Chinese companies improves. In the near term, there is a material risk that Baidu stock may test yearly lows near the $153 level.

For a look at all of today’s economic events, check out our economic calendar.

Earnings to Watch Next Week: Cable One, BioNTech, eBay, Walt Disney and Baidu in Focus

Earnings Calendar For The Week Of August 9

Monday (August 9)

IN THE SPOTLIGHT: CABLE ONE, BIONTECH

CABLE ONE: The U.S.-based broadband communications provider is expected to report earnings of $11.19 per share for the second quarter, representing a year-on-year increase of over 5% from a year earlier, up from 10.63 per share seen in the same period a year ago.

The Phoenix-based company would post revenue growth of over 17% to $385 million, up from $328.3 million posted a year ago. The company has beaten earnings per share (EPS) estimates in three of the last four quarters, according to ZACKS Research.

BIONTECH: The biotechnology company BioNTech is expected to report earnings of $8.35 per share for the second quarter, representing a year-on-year increase of over 2,000% from a year earlier.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 9

Ticker Company EPS Forecast
DRNA Dicerna Pharmaceuticals $0.41
APD Air Products & Chemicals $2.36
SGMS Scientific Games $0.01
TGNA Tegna $0.49
DISH Dish Network $0.89
AMC AMC Entertainment -$0.94
OSH Oak Street Health -$0.33
CHGG Chegg $0.37
CABO Cable One Inc $11.19
CF CF Industries $1.56
ACM AECOM $0.72
WES Western Gas Partners $0.57
HALO Halozyme Therapeutics $0.43
QLYS Qualys $0.68
DDD 3D Systems $0.05
CBT Cabot $1.18
NHI National Health Investors $0.84
DOOR Masonite International $2.12
ESE ESCO Technologies $0.82
IPAR Inter Parfums $0.40
STE Steris $1.49
RCKT Rocket Pharma -$0.66
ITCI Intra Cellular Therapies -$0.79
ELY Callaway Golf $0.01
BNTX BioNTech SE $7.54
TSN Tyson Foods $1.60
HE Hawaiian Electric Industries $0.49
ENR Energizer $0.67
SYKE Sykess $0.58
RDNT RadNet $0.14
HBM HudBay Minerals Ord Shs $0.09
ACKAY Arcelik ADR $0.46

Tuesday (August 10)

Ticker Company EPS Forecast
JHX James Hardie Industries $0.28
SYY Sysco $0.60
IHG Intercontinental Hotels $0.46
ARMK Aramark $0.02
TAC TransAlta USA -$0.01
VSH Vishay Intertechnology $0.59
IIVI Ii Vi $0.75
YPF YPF $0.39
PAAS Pan American Silver USA $0.34
PAY VeriFone Systems $0.01
JAMF Jamf $0.05
COKE Coca Cola Bottlingconsolidated $5.78
DAR Darling Ingredients $0.86
TDG TransDigm $2.97

Wednesday (August 11)

IN THE SPOTLIGHT: EBAY

The e-commerce leader for physical and digital merchandise eBay is expected to report its second-quarter earnings of $0.96 per share, which represents a year-over-year decline of over 11% from $1.08 per share seen in the same quarter a year ago.

The San Jose, California-based e-commerce giant would post revenue growth of about 4% to $2.97 billion. The company has beaten earnings per share (EPS) estimates all times in the last four quarters, according to ZACKS Research.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 11

Ticker Company EPS Forecast
CIB Bancolombia $0.53
DM Dominion Midstream Partners -$0.09
ELP Companhia Paranaense De Energia $0.63
CAE Cae USA $0.14
ENS Enersys $1.20
PRGO Perrigo $0.60
HAE Haemonetics $0.45
AIT Applied Industrial Technologies $1.17
RPRX Repros Therapeutics $0.70
VERX Vertex Inc. Cl A $0.05
WIX WIX -$0.43
WEN Wendy’s $0.18
GOCO Gocompare.Com -$0.03
AZPN Aspen Technology $1.47
FNV Franco Nevada $0.93
RGLD Royal Gold Usa) $0.90
CACI Caci International $5.56
RXT Rackspace $0.18
AVT Avnet $0.79
UGP Ultrapar Participacoes $0.06
EBR Centrais Eletricas Brasileiras $0.28
EBAY eBay $0.96

Thursday (August 12)

IN THE SPOTLIGHT: WALT DISNEY, BAIDU

WALT DISNEY: The world’s leading producers and providers of entertainment and information is expected to report its fiscal third-quarter earnings of $0.55 per share, which represents year-over-year growth of over 580% from $0.08 per share seen in the same quarter a year ago.

The family entertainment company would post over 42% to $16.82 billion. The company has beaten earnings per share (EPS) estimates all times in last four quarters, according to ZACKS Research.

Disney is building content assets that enable it to take advantage of the significant direct-to-consumer streaming opportunity ahead. Disney’s underlying IP remains best-in-class, supporting long term content monetization opportunities,” noted Benjamin Swinburne, equity analyst at Morgan Stanley.

“During this period of FCF pressure from Parks closures, ESPN’s FCF generation is key to driving down leverage. Historical cycles suggest a potential return to above prior peak US Parks revenues in FY23”

BAIDU: The leader in the Chinese search industry in terms of user market share is expected to report its second-quarter earnings of $1.93 per share, which represents a year-over-year decline of over 7% from $2.08 per share seen in the same quarter a year ago.

The Chinese tech giant will report full-year earnings of $8.60 per share for the current financial year, with EPS estimates ranging from $8.28 to $9.09, according to ZACKS Research.

Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” noted Gary Yu, equity analyst at Morgan Stanley.

“Our price target reflects materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from competition. The company appears well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 16x 2022e non-GAAP P/E, vs. the 10-30x trading band since 2018.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 12

Ticker Company EPS Forecast
BR Broadridge Financial Solutions $2.19
AEG Aegon $0.15
BAM Brookfield Asset Management USA $0.72
PLTR Palantir Technologies Inc. $0.03
FLO Flowers Foods $0.28
BAP Credicorp USA $9.65
PVG Pretium Resources $0.13
DIS Walt Disney $0.55
BRFS BRF $0.07
SBS Companhia De Saneamento Basico $0.24
AEBZY Anadolu Efes ADR $0.00
MIDD Middleby $2.07
TKC Turkcell $0.16
BIDU Baidu $13.18

Friday (August 13)

There are no major earnings scheduled.

Baidu Shares Rise as Q1 Revenue Tops Estimates; Target Price $351

Baidu Inc, a leader in the Chinese search industry in terms of user market share, reported better-than-expected revenue in the first quarter, largely driven by cloud and artificial intelligence businesses, sending its shares up over 4% on Tuesday.

The Chinese tech giant said its total revenue surged 25% to CNY28.13 billion, largely driven by non-advertising revenue which grew 70% year over year. That beat the Wall Street consensus estimates of CNY27.25 billion.

For the second quarter of 2021, the dominant Chinese internet search engine company forecasts revenues in the range of CNY29.7 billion CNY32.5 billion, representing a growth rate of 14% to 25% year over year, which assumes that Baidu Core revenue will grow between 20% and 33% year over year. This guidance does not include a potential contribution from the acquisition of YY Live.

Following this, the U.S. listed Baidu stock rose over 4% to $197.72 on Tuesday. The stork slumped 11% so far this year.

Analyst Comments

Baidu reported 1Q results with revenue and non-GAAP earnings ahead of consensus. For Baidu core, revenue came in better than our expectations and in line with guidance, while non-GAAP op margin came in ahead of our estimates. The mid-point of Baidu 2Q total revenue guidance is ahead of consensus. For IQ, revenue and earnings beat expectations, and mid-point of 2Q revenue guidance are inline,” noted Thomas Chong, equity analyst at Jefferies.

Baidu Stock Price Forecast

Sixteen analysts who offered stock ratings for Baidu in the last three months forecast the average price in 12 months of $351.36 with a high forecast of $407.00 and a low forecast of $280.00.

The average price target represents an 82.34% increase from the last price of $192.70. Of those 16 analysts, 14 rated “Buy”, two rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $300 with a high of $390 under a bull scenario and $160 under the worst-case scenario. The firm gave an “Equal-weight” rating on the Chinese Internet giant’s stock.

Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” noted Gary Yu, equity analyst at Morgan Stanley.

“Our price target reflects materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from the competition. The company is well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 18x consensus 2022e non-GAAP P/E vs. the historical 11-24x trading band since 2019.”

Several other analysts have also updated their stock outlook. CFRA cut the target price by $58 to $190. Loop Capital raised the price objective to $290 from $210. Baidu had its target price boosted by equities research analysts at Goldman Sachs to $385 from $383. Citigroup upped their target price on shares of Baidu to $324 from $292.

Check out FX Empire’s earnings calendar

Chinese Tech Giant Baidu Ends 2020 on Solid Note, Shares Gain

Baidu, a leader in the Chinese search industry in terms of user market share, reported better-than-expected earnings in the fourth quarter, largely driven by pent-up demand for its cloud and other services, sending its shares up over 3% in extended trading on Wednesday.

The most used search engine in China said its total revenue jumped 5% to CNY 30.26 billion or $4.69 billion in the fourth quarter ended December 31, 2020, beating the Wall Street consensus estimates of CNY 30.06 billion.

Baidu’s non-GAAP EPS came in at CNY 20.08 or $3.08, well above the market expectations of CNY 16.89 or $2.51 per share.

Baidu reported 4Q results with revenue in-line with market expectations and non-GAAP earnings ahead of consensus. For Baidu core, revenue and non-GAAP earnings beat our estimates, with non-GAAP op margin at 35%. For IQ, revenue came in-line and earnings beat on lower-than-expected costs. Mid-point of 1Q revenue guidance for Baidu beat consensus while IQ was inline,” wrote Thomas Chong, equity analyst at Jefferies.

The company, which generates the bulk of its revenue from pay-for-performance advertising and tailor-made advertising services, forecasts revenue in the range of CNY 26 billion to 28.5 billion in the first quarter of 2020.

The U.S.-listed Baidu‘s shares, which surged more than 70% last year, rose 3.5% to $319.5 in extended trading on Wednesday.

Executive Comments

Baidu ended 2020 on a solid note with our business benefiting from improving macroeconomic environment and the digitalization of industrial Internet. Our focus on innovation through technology is paying off with Baidu Core non-marketing revenue growing 52% year over year in the fourth quarter,” said Robin Li, Co-founder and CEO of Baidu.

“As we enter 2021, Baidu is well-positioned as a leading AI company with strong Internet foundation to seize the huge market opportunities in cloud services, autonomous driving, smart transportation, and other AI opportunities. We also hope to capitalize on our huge Internet reach with more non-marketing services.”

Baidu Stock Price Forecast

Thirteen analysts who offered stock ratings for Baidu in the last three months forecast the average price in 12 months of $271.42 with a high forecast of $376.00 and a low forecast of $180.00.

The average price target represents a -12.07% decrease from the last price of $308.68. From those 13 analysts, 11 rated “Buy”, two rated “Hold”, none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $190 with a high of $250 under a bull scenario and $130 under the worst-case scenario. The firm gave an “Equal-weigh” rating on the Chinese tech giant’s stock.

Several other analysts have also updated their stock outlook. Mizuho raised the target price to $325 from $250. Baidu had its price objective hoisted by Oppenheimer to $305 from $165. The firm currently has an outperform rating on the information services provider’s stock. KeyCorp raised their target price to $290 from $190 and gave the stock an overweight rating. Citigroup raised their target price to $292 from $183 and gave the stock a buy rating.

Analyst Comments

“Following a sharp recent rally, we maintain our EW rating on an industry-relative basis. Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” said Gary Yu, equity analyst at Morgan Stanley.

“Our price target reflects the materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from the competition. The company is well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 18x consensus 2021e non-GAAP P/E the vs. historical 11-24x trading band since 2019.”

Check out FX Empire’s earnings calendar

Three Top Earnings Plays This Week

Monthly options expire at the end of this holiday-shortened trading week, hopefully generating much-needed volatility after a long string of low volume narrow range sessions. Major benchmarks are nearing overbought technical readings last hit in February 2020, just before all hell broke loose as a result of the pandemic. While it isn’t wise to expect a repeat any time soon, broad-based complacency has generated ideal conditions for a major shakeout.

Dow component Walmart Inc. (WMT) is the only U.S mega-cap on this week’s top earnings list, followed by China’s Baidu Inc. (BIDU) and Canada’s Shopify Inc. (SHOP). In case you hadn’t heard, the much smaller SHOP has been an absolute monster, rising 365% since the last trading day of 2019.  Three major hotel chains also step to the plate, telling us how many folks gave up overnight travel when the second wave erupted in October.

Shopify

Shopify is expected to report a Q4 2020 profit of $1.21 per-share on $913.3 million in revenue. The e-commerce juggernaut has been grinding through a ferocious uptrend since coming public at 16 in 2015 and is now trading just shy of the $1,500 level. However, the stock has gained a phenomenal 34% in just the last two weeks, setting off all sorts of overbought signals that raise odds for an aggressive ‘sell-the-news’ reaction, especially during options expiration.

Walmart

Wall Street analysts are looking for Walmart to post a Q4 2020 profit of $1.51 per-share on $147.1 billion in revenue, better than the $1.38 earned in the same quarter last year.  The stock posted a respectable 21% return in 2020 but all those gains were booked between March and the end of August. Shareholders have pulled up stakes and walked away since that time, rotating their profits into COVID-19 recovery plays.

Baidu

Baidu should report Q4 2020 earnings of $16.73 per-share on $30.1 billion in revenue, much worse than last year’s $26.54 per-share. However, the stock just broke out to an all-time high, underpinned by the formation of an intelligent electric vehicle company that’s forced Wall Street to reprice the search provider at a higher multiple, in line with other manufacturers. Look for traders to jump on any updates regarding that initiative.

For a look at this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Earnings to Watch Next Week: Advance Auto Parts, Baidu, Walmart and Magna in Focus

Earnings Calendar For The Week Of February 15

Monday (February 15)

IN THE SPOTLIGHT: LIBERTY GLOBAL

Liberty Global, the largest international broadband communications provider, is expected is report a profit of $0.25 per share in the fourth quarter, which represents year-over-year growth of over 110% from the same quarter last year when the company reported loss of $1.98 per share.

The Anglo-Dutch-American multinational telecommunications company is expected to post report a rise in revenue to $3.28 billion, up from $2.98 billion seen in the same period a year ago.

Liberty offers a complex proposition, but it has also a good story ahead if it’s able to replicate its Dutch merger success (combination of Ziggo & Vodafone) in the UK and Swiss transactions. From here we see two key value drivers: (1) the delivery on deal synergies, and (2) Liberty‘s ability to renew with growth. Meanwhile, 2021 is a transition/integration year,” noted Nawar Cristini, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 15

Ticker Company EPS Forecast
SCI Service International $0.88
LBTYA Liberty Global Class A Ordinary Shares $0.25
RIG Transocean -$0.16
DM Dominion Midstream Partners -$0.06
ICAD Icade €2.33
MELI MercadoLibre $0.08
OSH Oak Street Health -$0.23
YALA Yalla $0.12
OMAB Grupo Aeroportuario Del Centro Nort $7.07
LBTYK LIBERTY GLOBAL $0.25

 

Tuesday (February 16)

IN THE SPOTLIGHT: ADVANCE AUTO PARTS, ROYAL CARIBBEAN CRUISES

ADVANCE AUTO PARTS: The leading automotive aftermarket parts retailer is expected is report a profit of $1.97 per share in the fourth quarter, which represents year-over-year growth of over 20% from the same quarter last year when the company reported profit of $1.64 per share.

The company will report a rise in revenue to $2.36 billion from $2.11 billion seen in the same period a year ago.

“Conditions seem supportive for Advance Auto Parts (AAP) to deliver more meaningful margin expansion in 2021 and beyond. Expect in-line Q4 results; the April Virtual Strategy Update represents a more important potential catalyst. We are Overweight as risk/reward screens favourable,” said Simeon Gutman, equity analyst at Morgan Stanley.

AAP operates in a defensive (recession-resistant) category and has one of the largest long-term EBIT margin expansion opportunities in our coverage (we estimate 300-400 bps over time). COVID-19 slowed parts of AAP‘s transformation but gross and EBIT margin upside from internal initiatives is still expected beginning in 2021. Significant and improving FCF generation plus share repurchases likely to enhance EPS growth. We think the combination of a defensive category, AAP‘s progress generating stable top-line growth, and significant margin upside all make for a positive risk/reward skew.”

ROYAL CARIBBEAN CRUISES: The company which operates over 50 cruise ships on a selection of worldwide itineraries that call on more than 1,000 destinations is expected to report a loss of $5.20 in the fourth quarter, which represents a year-over-year decline of over 450% from the same quarter last year when the company reported a profit of $1.42 per share.

The Miami-based company will report revenue of $35.616 million, down over 98% from $ 2.52 billion seen in the same period a year ago.

“We think the cruise industry will be one of the slowest sub-sectors to recover from COVID-19. Cruising needs not just international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence. We expect cruising to resume in Q2 2021, and expect FY19 EBITDA to return in FY23 given FY22 will be the first normal year, and pricing will likely come under pressure. FY19 EBITDA implies EPS 40% lower given share issue dilution and higher interest expense,” said Jamie Rollo, equity analyst at Morgan Stanley.

“We see debt doubling in FY21 vs FY19 due to operating losses and high capex commitments, and leverage looks high at 6x even in FY23e, so we see a risk more equity might need to be raised.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 16

Ticker Company EPS Forecast
OMC Omnicom $1.66
AN AutoNation $2.03
RCL Royal Caribbean Cruises -$5.20
ES Eversource Energy $0.85
LPX Louisiana Pacific $1.70
BRKR Bruker $0.55
TRU TransUnion $0.79
BKI Black Iron Inc. $0.56
ALLE Allegion $1.18
IAA IAA Inc $0.44
SABR Sabre -$0.66
FELE Franklin Electric $0.52
CVS CVS Health $1.24
AAP Advance Auto Parts $1.97
ZTS Zoetis $0.86
ECL Ecolab $1.26
IPGP IPG Photonics $0.98
VMC Vulcan Materials $0.99
GNW Genworth Financial $0.20
EXAS Exact Sciences -$0.22
FQVLF First Quantum Minera $0.11
CAR Avis Budget -$0.60
ENLC EnLink Midstream $0.02
CMP Compass Minerals International $1.40
ACC American Campus Communities $0.09
TNET TriNet $0.26
QTS QTS Realty $0.02
CSOD Cornerstone OnDemand $0.27
KAR Kar Auction Services $0.29
IOSP Innospec $0.77
RPAI Retail Properties Of America $0.01
OXY Occidental Petroleum -$0.58
DVN Devon Energy $0.03
DIOD Diodes $0.70
A Agilent $0.90
SEDG Solaredge Technologies Inc $0.66
AIG AIG $0.93
RNG RingCentral $0.27
BYD Boyd Gaming $0.39
LSCC Lattice Semiconductor $0.17
HE Hawaiian Electric Industries $0.34
MCY Mercury General $0.69
CLR Continental Resources -$0.08
VERX Vertex Inc. Cl A $0.07
TX Ternium $1.15
SGMS Scientific Games -$0.39
EXPD Expeditors International Of Washington $1.07
AMED Amedisys $1.45
MDT Medtronic $1.15
AWK American Water Works $0.80
BLUE Bluebird Bio -$3.01
WLK Westlake Chemical $0.68

 

Wednesday (February 17)

IN THE SPOTLIGHT: BIDU

Baidu.com Inc, a leader in the Chinese search industry in terms of user market share to report $2.51 earnings per share (EPS) for the current fiscal quarter, which represents a year-over-year decline of over 30% from the same quarter last year when the company reported a profit of $3.81 per share.

The Chinese tech giant will post sales of $4.46 billion for the current fiscal quarter, up over 7% from $4.15 billion during the same quarter last year.

“Following a sharp recent rally, we maintain our EW rating on an industry-relative basis. Baidu has provided better disclosure and has struck a constructive tone on its AI initiatives. We find it well-positioned in certain industrial applications. We also like its rich cash position and strategic investments,” wrote Gary Yu, equity analyst at Morgan Stanley.

“Our price target reflects materialization of AI investments, but we highlight milder near-term growth vs. peers amid risks from competition. The company is well-positioned to ride the next Internet wave, but patience is needed. Our price target implies 18x consensus 2021e non-GAAP P/E the vs. historical 11-24x trading band since 2019.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 17

Ticker Company EPS Forecast
RPRX Repros Therapeutics $0.71
DAVA Endava Ltd $0.26
GPC Genuine Parts $1.35
ADI Analog Devices $1.32
EQT EQT -$0.27
OC Owens Corning $1.37
GRMN Garmin $1.39
CRL Charles River Laboratories $2.11
NI NiSource $0.33
HSIC Henry Schein $1.00
HLT Hilton Worldwide $0.03
FUN Cedar Fair -$2.28
COMM CommScope $0.44
CHH Choice Hotels International $0.64
ALE Allete $0.75
WIX WIX -$0.11
PXD Pioneer Natural Resources $0.70
SUN Sunoco $0.82
JACK Jack In The Box $1.74
VCYT Veracyte -$0.10
RBC Regal Beloit Corporation $1.58
CF CF Industries $0.11
SPWR SunPower $0.11
BFAM Bright Horizons Family Solutions -$0.23
SNBR Scs Group Plc $1.42
VMI Valmont Industries $1.79
UFPI Universal Forest Products $0.72
SUI Sun Communities $0.09
ALSN Allison Transmission $0.61
AM Antero Midstream Partners $0.19
WCN Waste Connections $0.63
CDE CoEUR Mining $0.13
PEGA Pegasystems $0.23
GMED Globus Medical $0.51
TROX Tronox $0.19
CONE CyrusOne -$0.03
WRI Weingarten Realty Investors $0.10
AR Antero Resources $0.06
CAKE Cheesecake Factory -$0.04
HPP Hudson Pacific Properties $0.05
AEL American Equity Investment Life $0.97
OGS One Gas $1.06
MOS Mosaic $0.20
H Hyatt Hotels -$1.37
MRO Marathon Oil -$0.20
PAAS Pan American Silver USA $0.43
QTWO Q2 $0.05
MANT ManTech International $0.71
HLF Herbalife $0.84
LOPE Grand Canyon Education $1.79
BIDU Baidu $17.78
SNPS Synopsys $1.47
ALB Albemarle $1.10
STMP Stamps $2.92
AJRD Aerojet Rocketdyne $0.50
ETR Entergy $0.68
GDOT Green Dot $0.16
DISH Dish Network $0.75
AU Anglogold Ashanti $1.85
CBD Companhia Brasileira De Distrib $0.46
TS Tenaris $0.01
TLRY Tilray -$0.14
MIC Macquarie Infrastructure $0.21
SAM Boston Beer $2.63

 

Thursday (February 18)

IN THE SPOTLIGHT: WALMART

Walmart, an American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores from the United States, is expected to report a profit of $1.51 in the fourth quarter, which represents year-over-year growth of over 9% from the same quarter last year when the company reported profit of $1.38 per share.

Zacks Research forecasts Walmart‘s Q4 comparable sales to pop 5.2%, with its adjusted EPS set to climb 6.5% to $1.47 a share.

“On the top-line, we think market expectations are for 6-8% US comps, low double-digit Sam’s Club SSS growth, and mid-single-digit International revenue growth. We believe the buy-side is anticipating 40-60 bps of gross margin expansion and 20 bps SG&A leverage, translating to 70 bps of EBIT margin expansion and 25%+ EBIT growth. Overall, the bar for Q4 EPS seems to be in the range of $1.75-1.85,” said Simeon Gutman, equity analyst at Morgan Stanley.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 18

Ticker Company EPS Forecast
EPAM EPAM Systems $1.71
LXP Lexington Realty $0.08
BRC Brady $0.61
CFX Colfax $0.50
SYNH Syneos Health Inc $1.10
LKQ LKQ $0.58
GOLD Randgold Resources $0.31
RS Reliance Steel & Aluminum $1.96
SCL Stepan $1.08
DAN Dana $0.38
VC Visteon $1.14
WMT Walmart $1.51
MAR Marriott International $0.09
FOCS Focus Financial Partners Inc $0.77
SO Southern Co. $0.42
WM Waste Management $1.09
VG Vonage $0.05
IDCC InterDigital -$0.02
TRN Trinity Industries $0.15
TPH Tri Pointe Homes $0.67
IART Integra LifeSciences $0.73
WAB Westinghouse Air Brake Technologies $1.03
TRP Transcanada USA $0.78
IDA IdaCorp $0.67
SHLX Shell Midstream Partners $0.33
NICE Nice Systems $1.55
WST West Pharmaceutical Services $1.12
VTR Ventas $0.07
HL Hecla Mining $0.02
PPL PPL $0.61
AVNS Avanos Medical Inc $0.21
NEM Newmont Mining $0.95
HRL Hormel Foods $0.41
MD Mednax $0.36
TRGP Targa Resources $0.32
EBS Emergent BioSolutions $3.28
GLPI Gaming And Leisure Properties $0.56
TXRH Texas Roadhouse $0.49
COG Cabot Oil Gas $0.21
ATR AptarGroup $0.90
CWST Casella Waste Systems $0.14
QDEL Quidel $9.76
CVA Covanta -$0.01
OPK Opko Health $0.04
ROG Rogers $1.42
OLED Universal Display $0.64
KEYS Keysight Technologies $1.36
LNT Alliant Energy $0.23
ANET Arista Networks $2.39
HST Host Hotels & Resorts -$0.42
HASI Hannon Armstrong Sustnbl Infrstr Cap $0.34
ED Consolidated Edison $0.76
RBA Ritchie Bros. Auctioneers USA $0.58
TRIP TripAdvisor -$0.26
RXT Rackspace $0.23
DBX Dropbox $0.24
AMAT Applied Materials $1.28
MSA MSA Safety $1.05
ADC Agree Realty $0.83
FLS Flowserve $0.53
AG First Majestic Silver $0.11
SNN Smith Nephew $1.18
GFI Gold Fields $0.35
BCS Barclays -$0.01
CS Credit Suisse $0.22
ORAN Orange $0.45
CPRT Copart $0.79
ARRY Array Technologies Inc $0.05
AEP American Electric Power $0.79
PBR Petroleo Brasileiro Petrobras $0.02
VALE Vale $0.90
TCP TC Pipelines $0.98
FSLR First Solar $1.27
USM United States Cellular -$0.02
RY Royal Bank Of Canada $1.68
TDS Telephone Data Systems $0.03
GOL Gol Linhas Aereas Inteligentes -$0.41
PCRX Pacira $0.82
NCLH Norwegian Cruise Line -$2.31
RGEN Repligen $0.31
TV Grupo Televisa Sab $0.25
ENV Envestnet $0.65
FMS Fresenius Medical Care $0.70
TFX Teleflex $3.03
PAC Grupo Aeroportuario Del Pacifico $0.46
NUVA NuVasive $0.55
SATS EchoStar $0.00
CIB Bancolombia $0.15

 

Friday (February 19)

IN THE SPOTLIGHT: MAGNA INTERNATIONAL

Magna International, one of the largest and most diversified auto parts suppliers in the world, is expected to report a profit of $2.02 in the fourth quarter, which represents year-over-year growth of over 40% from the same quarter last year when the company reported profit of $1.41 per share.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE FEBRUARY 19

Ticker Company EPS Forecast
THRM Gentherm $0.65
BCPC Balchem $0.69
POR Portland General Electric $0.42
ITT ITT $0.92
SRC Spirit Realty Capital New $0.18
MGA Magna International USA $2.02
ESNT Essent $1.21
DE Deere & Company $2.12
HBM HudBay Minerals Ord Shs -$0.07
AEE Ameren $0.42
TKC Turkcell $0.15
DANOY Danone PK $0.45
HMSY HMS $0.44
CNK Cinemark -$1.46
E ENI $0.01

 

Baidu EV Business Could Trigger Breakout

Baidu Inc. (BIDU) is trading higher on Monday after a top tier analyst raised his price target by $140. The stock posted a two-year high in January after announcing the formation of an intelligent electric vehicle company, forcing Wall Street to consider repricing the search giant at a higher multiple, in line with other manufacturers. The new operation is moving quickly, obtaining permission from the CA Dept. of Motor Vehicles to test driverless autos on Sunnyvale roads.

Baidu Enters Rapidly-Growing Market

The autonomous driving initiative, dubbed ‘Apollo’, is expected to tap into a rapidly-growing market worth at least $12.5 billion in China alone by 2025. The program should generate at least three distinct revenue streams in coming years: robo-taxis, advanced driver-assistance systems (ADAS), and V2X (vehicle-to-everything). In addition, the embedded artificial intelligence modules could find other applications as the program evolves.

Oppenheimer analyst Jason Helfstein raised his price target from $165 to $305 on Monday, noting, “We expect the re-rating based on BIDU’s artificial intelligence businesses to continue, with a solid recovery of the advertising business as macro improvement sustains in China. We believe the recently announced intelligent electric vehicles joint venture with Geely will significantly accelerate the commercialization of Apollo, BIDU’s autonomous driving arm.”

Wall Street and Technical Outlook

Wall Street consensus has improved in the last quarter, lifting to a ‘Buy’ rating based upon 13 ‘Buy’ and 2 ‘Hold’ recommendations. No analysts are recommending that shareholders close positions and move to the sidelines. Price targets currently range from a low of $162 to a Street-high $305 while the stock opened Monday’s session about $18 above the median $221 target. Higher targets, like this morning’s Oppenheimer note, are likely to follow in coming weeks.

The stock topped out at 252 in 2015 and entered a broad trading range with support near 100. A 2018 breakout failed after adding just 32 points, reinforcing range resistance. Price action is nearing this barrier for the third time in six years, suggesting limited upside in coming weeks. However, Wall Street repricing from search engine to EV manufacturer could eventually trigger a strong breakout, with a price target well above 300.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Baidu Beats Revenue Estimates; Announces to Acquire JOYY’s Chinese Live Streaming Unit

Baidu, a leader in the Chinese search industry in terms of user market share, reported better-than-expected revenue in the third quarter as the world’s second-biggest economy emerged from its COVID-19 slump, helping revenue from advertising to gain momentum.

Chinese search engine leader also said it will acquire JOYY’s live streaming business in China, which includes YY mobile app, YY.com website and PC YY, among others, for an aggregate purchase price of about $3.6 billion in cash. The deal is expected to occur in the first half of next year.

Baidu’s total revenue increased 1% year-over-year to 28.23 billion yuan ($4.29 billion), beating market expectations of 27.45 billion yuan. One of the largest AI and Internet companies in the world forecasts fourth-quarter revenue between 28.6-31.3 billion yuan, in the range of Wall Street consensus of 28.98 billion yuan.

Baidu’s U.S.-listed shares closed 1.9% higher at $147.84 on Monday; the stock is up over 15% so far this year.

Executives’ Comments

“Our revenue growth turned positive in the third quarter with many advertising verticals turning around, putting Baidu in a good position to further benefit from a recovery in the Chinese economy. Our new AI businesses saw healthy growth in the third quarter, particularly from the cloud, where we are differentiating with AI solutions,” said Robin Li, Co-founder and CEO of Baidu.

“Our focus on differentiating Baidu with open-platform, in-app search and new AI businesses has enabled Baidu Core’s adjusted EBITDA margin to reach 46% in the third quarter. We also executed on our capital allocation strategy by selling down equity investments and continuing to execute on our share repurchase plan,” said Herman Yu, CFO of Baidu.

Baidu Stock Price Forecast

Eight equity analysts forecast the average price in 12 months at $159.25 with a high forecast of $182.00 and a low forecast of $130.00. The average price target represents a 7.72% increase from the last price of $147.84. From those eight analysts, six rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $130 with a high of $196 under a bull-case scenario and $84 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the leading Chinese search engine’s stock. Baidu had its price target increased by The Goldman Sachs Group to $162 from $144. They currently have a buy rating on the information services provider’s stock.

Several other analysts have also recently commented on the stock. Barclays raised their price target on shares of Baidu to $140 from $130 and gave the stock an equal weight rating. Benchmark reissued a buy rating and set a $165 price objective. Bank of America lowered their price objective to $175 from $186 and set a buy rating.

Analyst Comments

“Top-line growth slowdown amid risks from the competition. Baidu could generate slower-than-peer revenue growth before AI initiatives materialize. Well-positioned to ride the next Internet wave, but patience needed. We like Baidu’s long-term roadmap for AI and industrial application initiatives (i.e., autonomous driving, IoT ecosystem) with commercialization on the way, which we view as a long-term positive,” said Gary Yu, equity analyst at Morgan Stanley.

“Equal-weight on an industry-relative basis. We like Baidu’s rich cash position and strategic investments but expect macro issues and competition to shadow top-line growth near term. Our price target implies 15x our NTM non-GAAP P/E, the midrange of its historical 11-24x trading band since 2019,” Yu added.

Upside and Downside Risks

Risks to Upside: 1) Stronger core business recovery beyond current disruption to drive better top-line growth. 2) Solid margin expansion from investment discipline and cost control – highlighted by Morgan Stanley.

Risks to Downside: 1) Intensifying competition in search and online video, driving up traffic acquisition costs and more aggressive content investments. 2) Potential regulation on the news feed, healthcare, education, and gaming industries, limiting ad revenue growth.

Check out FX Empire’s earnings calendar

Baidu Completes Double Bottom Reversal

Chinese search engine Baidu Inc. (BIDU) reports Q3 2020 earnings after Monday’s U.S. closing bell, with analysts looking for a profit of $13.08 per-share on $27.5 billion in revenue. If met, earnings-per-share (EPS) would mark a 750% profit increase compared to the same quarter in 2019.  The stock fell more than 6% after posting mostly in-line results in August but recovered quickly and is now trading at a 10-month high.

Baidu Marketing On The Mend

Baidu’s marketing division produces 85% of total revenue, exposing price action to cyclical economic trends. That division took a hit during the first quarter shutdown but is now back on the growth track. Search inquiries and revenue driven by the hugely-popular mobile app rose 28% in Q2 2020 and double digits year-over-year, raising prospects for strong performance in coming quarters. In addition, the company expects to enhance average revenue per user (ARPU) through membership, gaming and live streaming initiatives.

Barclay’s analyst Gregory Zhao just upgraded the stock to ‘Overweight’ and raised the price target to $170, noting, “we think both the online marketing services and the new AI initiatives of Baidu Core are reaching an inflection point. Since 2Q20 its marketing division has followed the online ad industry’s recovery trend to gradually restore growth momentum. We also see substantial upside in the potential monetization through membership, gaming and live streaming to fully utilize existing traffic.

Wall Street And Technical Outlook

The stock has underperformed broad technology benchmarks in recent years, despite bullish Wall Street coverage. It’s currently rated at a ‘Strong Buy’, based upon 7 ‘Buy’ and 2 ‘Hold’ recommendations, and no analysts are recommending that shareholders close positions. Price targets currently range from a low of $130 to a Street-high $182 while the stock closed Friday’s U.S. session $14 below the median $160 target.

Baidu posted new three new highs into 2018 and entered a steep decline that hit a 7-year low in the first quarter. It spent the last 8 months working back to the January 2020 high at 147 and just completed the 100% retracement. This level marks a high volume 2019 breakdown through the 2018 low, as well at 200-week moving average resistance. A better-than-expected report and strong guidance may be needed to mount this formidable barrier.

For a look at all of today’s economic events, check out our economic calendar.