Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 4 Jul, 24 | BIDU | Buy | USD 90.06 | USD 97.26 | USD 104.47 | 8 days | 16.0% |
Data Powered by EOD Historical Data (“EODHD”).
Baidu, Inc. provides online marketing and cloud services through an internet platform in the People's Republic of China. It operates in two segments, Baidu Core and iQIYI. The Baidu Core segment offers search-based, feed-based, and other online marketing services; cloud services; and products and other services from AI initiatives. This segment also operates Haokan, a user generated and professionally produced short videos platform. The iQIYI segment operates an online entertainment video platform that offers original, professionally produced, and partner-generated content. The company was incorporated in 2000 and is headquartered in Beijing, the People's Republic of China.
The Stock hovering near support zone range USD 80- USD 90, meanwhile the leading momentum indicator 14-Day RSI recorded a trend reversal signal on daily price chart as it moved above 40.
Lower Balance Sheet risk as Total Debt to EBITDA stood at 2.74x.
Chinese stocks regardless of the decent fundamentals are trading in a long-term bearish cycle.
BIDU stocks are trading ~17% below it 200-Day Simple Moving Average (SMA), indicating a long-term bearishness in the stock.
Intense competition in the AI & Internet Sectors, Reliance on Advertising Revenue, Regulatory challenges and macro uncertainities etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 90.06 | 75.65 | 97.26 | 104.47 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Financial: BIDU's Gross margin improved from ~48.3% in FY22 to 51.6% in FY23. Also, Net Income for common shareholders improved to 14.8% in FY23 from 6.1% in FY22.
Technicals: The leading momentum indicator 14-Day RSI recorded a trend reversal signal on daily price chart as it moved above 40.
Outlook: Stock: Trading at discount to its US counterparts from the Price to Earnings (x) multiple. BIDU trading at TTM P/E (x) multiple of 7.98x whereas Peer Median TTM P/E (x) stood at 14.67x, indicating a discount of around 50%. As fundamentals of the company is in the right direction, we believe stock will catch up with global peers in coming years.
Given the aforementioned factors, a 'Buy' recommendation has been assigned on the stock at the closing price of USD 90.06 as of July 03, 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Communication Services Industry: Internet Content & Information
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| BIDU Baidu Inc |
-2.49 2.82% | 85.86 | 12.29 | 7.98 | 0.24 | 0.85 | 1.24 | 6.04 |
| GOOGL Alphabet Inc Class A |
1.96 1.04% | 190.36 | 26.81 | 23.20 | 6.41 | 6.92 | 6.14 | 19.27 |
| GOOG Alphabet Inc Class C |
1.44 0.75% | 191.59 | 27.01 | 23.42 | 6.41 | 6.99 | 6.14 | 19.27 |
| META Meta Platforms Inc. |
7.91 1.32% | 605.10 | 27.55 | 25.32 | 9.67 | 8.52 | 9.46 | 21.61 |
| TCTZF Tencent Holdings Ltd |
- -% | 51.87 | 13.50 | 14.64 | 0.64 | 3.44 | 0.64 | 1.54 |
Data Powered by EOD Historical Data (“EODHD”).
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 03, 2024. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.
Note 4: The report publishing date is as per the Pacific Time Zone.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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