Baidu Inc. (BIDU) Shares: Are They Risky Or Cheap?

Baidu Inc. (NASDAQ:BIDU) finished Wednesday with an addition of $4.38 to close at $163.85, an upside of 2.75 percent. An average of 3,267,180 shares of common stock have been traded in the last five days. There was a gain of $14.49 in the past week. The last 20 days have seen an average of 3,413,025 shares traded, while the 50-day average volume stands at 4,544,352.

BIDU stock has increased by 2.07% in the last month. The company shares reached their 1-month lowest point of $144.51 on 10/04/21. With the stock rallying to its 52-week high on 02/22/21, shares of the company touched a low of $126.38 and a high of $354.82 in 52 weeks. In spite of this, the price is down -53.82% from the 52-week high.


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Valuation Metrics

Baidu Inc. (BIDU) has a trailing price-to-earnings (P/E) ratio of 8.32, which compares with the 30.20 for the broader industry and 30.41 for the sector. In the last five years, Baidu Inc.’s PE ratio has ranged between 182.91 and 7.181. The stock’s beta is 1.01. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 3.01, the price-to-book (PB) ratio at 1.60.

The quick ratio of Baidu Inc. for the three months ended June 29 was 3.10, and the current ratio was 3.10, indicating that the company is able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.32 and a total debt to equity ratio of 0.36 for the quarter ending June 29. On the profitability front, the trailing 12-month gross margin is 50.60% against a 5-year average of 47.7%. Baidu Inc.’s EBITDA margin for the year ending June 29 is 19.22%, while its operating margin for the same period stands at 14.70%. Its gross profit as reported stood at $7.96 billion compared to revenue of $16.41 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Baidu Inc.’s return on assets was 12.40%, compared to 6.6% over the last five years. In the past year, the return on investment has been 3.10%, and the 5-year average is 8.2%. Meanwhile, the return on equity (ROE) for the past 12 months has been 21.50% and the 5-year average holds at 12.9%. For the broader industry, ROE averaged 7.41 over the past year.

Earnings Surprise

For the three-month period that ended June 29, Baidu Inc. had $19.37 billion in cash. The analyst consensus anticipated Baidu Inc.’s latest quarter earnings to come in at $2.02 per share, but it turned out to be $2.39, a 18.30% surprise. For the quarter, EBITDA amounted to $536.0 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Baidu Inc. (BIDU) price momentum. RSI 9-day as of the close on 13 October was 63.18%, suggesting the stock is Neutral, with historical volatility in this time frame at 40.37%.

As of today, BIDU’s price is $160.82 +9.70% or $14.49 from its 5-day moving average. BIDU is currently trading +1.31% higher than its 20-day SMA and -13.55% lower than its 100-day SMA. However, the stock’s current price level is -0.15% below the SMA50 and -15.14% below the SMA200.

The stochastic %K and %D were 77.27% and 80.16%, respectively, and the average true range (ATR) was 5.28. With the 14-day stochastic at 86.30% and the average true range at 5.29, the RSI (14) stands at 57.99%. The stock has reached 6.13 on the 9-day MACD Oscillator while the 14-day reading was at 6.51.

Analyst Ratings

Oppenheimer reiterated its an Outperform rating on Baidu Inc. (NASDAQ: BIDU), but raised their price target to $355, indicating a potential price increase of 116.66% for the stock.The consensus rating for Baidu Inc. (BIDU) among analysts is Buy. According to current brokerage recommendations, 1 brokerage firm advise that investors sell BIDU, while 5 suggest investors hold. There are 0 analysts who rate the stock as underweight. The stock is rated overweight by 3 analysts, while 33 others rate it as a “buy”.

What is BIDU’s price target for the next 12 months?

Analysts predict a range of price targets between $982.25 and $2307.74, with a median target of $1674.76. Taking a look at these predictions, the average price target given by analysts for Baidu Inc. (BIDU) stock is $1645.41.

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