In a report released today, Gary Yu from Morgan Stanley maintained a Hold rating on Baidu, with a price target of $150.00.
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Gary Yu has given his Hold rating due to a combination of factors tied to Baidu’s recent performance and business mix. The company’s overall revenue declined year over year, and core advertising activities remained under pressure, even though this weakness was partially offset by solid growth in non‑marketing and AI‑related segments, which now account for a large share of core revenue.
At the same time, profitability showed signs of stabilization, with core operating profit improving quarter on quarter mainly thanks to reduced depreciation expenses after prior impairments and healthier cash generation. While these trends, along with the planned first dividend, support the stock’s downside protection, the limited earnings momentum and only moderate upside to the target price lead Gary Yu to view the shares as fairly valued, justifying a Hold stance rather than a more aggressive rating.