Chinese tech company Baidu (BIDU) is set to release its Q4 results today. BIDU stock has lost over 9% over the past year due to weak advertising revenue, macroeconomic challenges, AI search monetization issues, and competitive pressures in its electric vehicle (EV) venture. Wall Street analysts anticipate that the company will report earnings of $1.97 per share, reflecting a 34% year-over-year decrease.
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Also, revenues are expected to decline by 5.4% from the same quarter last year, reaching $4.58 billion, according to data from the TipRanks Forecast page.
Recent Event Ahead of Q4 Print
As Baidu prepares to report earnings, a key development has influenced investor sentiment.
On February 13, Baidu’s stock gained after the company announced that its AI chatbot, ERNIE Bot, will be available for free to all users starting April 1. In a WeChat post, Baidu stated that the chatbot will be accessible at no cost on both desktop and mobile platforms. In addition, Baidu revealed plans to launch a new “Deep Search” feature, designed to enhance reasoning, which will also be available for free from April 1.
Analysts’ Views on BIDU Ahead of Q4 Results
Ahead of BIDU’s Q4 results, Barclays analyst Jiong Shao raised the company’s price target from $83 to $95, reflecting a broader re-rating of Chinese ADRs amid growing optimism about China’s economic recovery. Investors have become more confident in China’s market outlook, leading to higher valuations for U.S.-listed Chinese stocks.
However, Shao maintained an Equal weight rating, as Baidu’s advertising revenue remains pressured by GenAI cannibalization. While the analyst expects growth to resume, he remains cautious until a clear turning point emerges.
Meanwhile, another analyst, Fawne Jiang of Benchmark Co., maintained a Buy rating, citing several key factors. Despite a tough FY24 due to macro pressures, Jiang expects a recovery in Baidu’s core business. The analyst believes that the company’s ad business is likely to stabilize by Q1 2025, with AI search potentially driving growth in FY25.
Jiang also finds Baidu’s valuation attractive at the current levels. While the company faces competition in the Robotaxi space from Tesla (TSLA) and Alphabet’s (GOOGL) Waymo, its international expansion remains promising. With strong cash reserves and stabilizing fundamentals, Jiang sees a favorable risk/reward outlook.
Options Traders Anticipate a Large Move
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting a 7.85% move in either direction.
Is BIDU a Buy or a Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BIDU stock based on eight Buys and six Holds assigned in the past three months, as indicated by the graphic below. The average BIDU price target of $107.54 per share implies 10.32% upside potential.
