Baidu Named ‘Catalyst Driven Idea’ at Morgan Stanley

Following Baidu’s 9% gain on Tuesday and ahead of its third-quarter results on November 22, Morgan Stanley analyst Gary Yu named the stock a  “Catalyst Driven Idea.” 

The Chinese technology company, along with other US-listed Chinese stocks, rallied during yesterday’s session as investors reacted positively to US President Biden and Chinese President Xi Jinping’s talks at the G-20 summit.

Baidu shares are down 33% this year but have climbed over 17% in the last week of trading. 

Ahead of its third-quarter earnings, Yu said he expects Baidu’s core marketing revenue to fall 5% year-over-year but argues that if the company achieves positive growth, the market will be more confident in its recovery trajectory. The analyst, who has an Equal Weight rating and a $140 price target on the stock, added that Baidu’s core marketing revenue growth inflection will be its next share price catalyst.

Elsewhere, Mizuho Securities analyst James Lee cut the firm’s price target on Baidu to $200 from $275 in a note to clients on Monday. Lee kept a Buy rating on the stock but said he expects the recovery curve for China internet companies in the second half of the year to be slow due to the ongoing rising Covid cases and mobility restrictions that have impacted consumer sentiment and business activities. The analyst sees the headwind impacting all segments, including e-commerce, cloud computing, and advertising. 

According to TipRanks data, out of 12 analysts with ratings on Baidu, 10 have assigned the stock a Buy rating, and two have assigned a Sell rating.