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Investing.com - Tiger Securities has lowered its price target on Baidu (NASDAQ:BIDU) to $100.00 from $110.00 while maintaining a Buy rating on the stock. Currently trading at $86.33, InvestingPro analysis suggests the stock is undervalued, with a P/E ratio of 8.5x and strong financial health metrics.
The firm cited ongoing challenges with monetizing AI-generated search results, which now account for approximately 50% of total queries, up from 35% in April, while the monetization model remains in testing phase.
Tiger Securities also noted that the consolidation of YY, previously one of Baidu’s top advertising clients, is expected to negatively impact Baidu’s advertising revenue, prompting the firm to lower its 2025 ad revenue forecasts.
The firm now expects core advertising revenue to decline 18% year-over-year in both second and third quarters, with core non-GAAP operating income projected to drop 45% and 44% year-over-year, respectively.
Despite these challenges, Tiger Securities maintained its forecast of 25% year-over-year growth in second-quarter cloud revenue and raised its estimate for other revenue to reflect the YY consolidation.
In other recent news, Baidu reported its first-quarter earnings for 2025, exceeding expectations with strong revenue and earnings. A significant contributor to this success was the company’s AI Cloud, which saw a 42% year-over-year growth and outperformed its competitors in terms of margins. Following these results, Benchmark increased its full-year projections for Baidu’s cloud business. Despite the positive earnings report, several analysts have adjusted their price targets for Baidu. Benchmark lowered its target to $120 while maintaining a Buy rating. UBS also revised its target to $107, citing concerns about a potential slowdown in core advertising revenue despite maintaining a Buy rating. US Tiger Securities set a new target of $110, pointing to near-term challenges in Baidu’s transition to an AI-driven search model. The company has been increasing AI-generated content in its search results, which improved user engagement, but monetization efforts are still developing. This transition has led to a 6% decline in core advertising revenue, slightly better than the previous quarter’s 7% decrease.
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