Tuesday, November 21, 2006

WR Hambrecht Research Report on Baidu

From WR Hambrecht:

"We are initiating coverage of Baidu.com, Inc. with a Buy rating and a 12-month price target of $130 per share. The company is the largest search engine in China, leveraging its large traffic volume to drive online advertising revenues. We believe the company is well positioned for expected positive trends, including the greater adoption of paid search by SMEs and brand advertisers, the growth of e-commerce, and the emergence of user-generated content. In addition, Baidu's local know-how and attentive customer service create barriers for its competitors. Lastly, we believe our long-term forecast could be too conservative based on a sensitivity analysis of SME adoption rates. Our price target is based on 40x our 2008 EPS estimate of $3.15 (ex-FAS123R) plus net cash, which we believe is reasonable compared with our expected long-tem growth rate for the company."

Full Report - PDF