What To Watch For In Baidu’s Q4 Earnings

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Baidu ( BIDU ) is expected to report its fourth quarter and full-year results early next week. Based on an internal memo (and filed as a 6K) circulated by the company’s CEO in early January, the company’s revenue for 2018 is likely to come in excess of RMB 100 billion. Baidu’s commentary on the broader economic sentiment and consequent impact to ad pricing will be key listening points.

We currently have a price estimate of $200 per share for Baidu, which is around 20% higher than the current market price. Our interactive dashboard on Baidu’s Price Estimate  outlines our forecasts and estimates for the company. You can modify any of the key drivers to visualize the impact of changes on its valuation.

While Chinese stimulus measures are expected to provide the country’s economy with significant liquidity to help stall the growth, the targeted areas and the transmission lag could delay the benefits flowing to the likes of Baidu. In this context, it will be important to note management’s commentary not only on the core advertising business but also around investments in content delivery and other projects (voice assistant and self-driving, among others). We will also be listening in on commentary around traction in the Baidu DuerOS Voice Assistant and the Apollo program.

While the U.S.-China trade dispute could aggravate Baidu’s pain in the near term, the company’s 70%+ share in the China search engine market is likely to help it remain in good stead over the long term.

Do not agree with our forecast? Create your own price forecast for Baidu by changing the base inputs (blue dots) on our interactive dashboard .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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