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<Research>Citi Reduces TP of Baidu (BIDU.US) to US$170; Gen AI Brings Incremental Rev. but Search Ads Still Weak
Recommend 6 Positive 13 Negative 2 |
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Citi Research noted in a report that BIDU-SW (09888.HK) (BIDU.US)'s 1Q24 results are in line with the broker's expectations, with total revenue up 1% YoY. Non-GAAP net profit elevated 22% YoY, beating Citi and consensus forecasts by 26% and 25% respectively. According to Citi, Baidu's search engine advertising business remained weak, with online marketing revenue growing only 3% in 1Q. Baidu management expected macro headwinds to further dampen advertising market sentiment, so revenues are likely to remain weak in 2Q-3Q. In addition, Baidu management disclosed that revenue from generative artificial intelligence increased gradually during the period, while the group's Ernie Bot foundation model has helped to improve advertising returns and conversion. The broker expected Baidu to continue to control costs and optimise spending, and now forecasted the group's core margin outlook to be maintained or improved. Citi dropped its target price on Baidu's US shares from US$176 to US$170 and maintained its Buy rating on the company, with a bullish outlook on AI development. AAStocks Financial News |
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