Morgan Stanley Opens 60-Day Research Tactical Idea on Baidu.com

Morgan Stanley has opened a research tactical idea on Baidu.com

believing that the share price will fall over the next 60 days. In the report, Morgan Stanley writes, "While Baidu could still deliver respectable growth, we expect its earnings growth rate to moderate in 2012 due to the macro overhangs faced by SMEs, higher base and heavier investment. Its 4Q11 earnings growth of 77% YoY, albeit respectable, was the slowest over the past two years. Its primary customers, namely Chinese SMEs, are facing unprecedented challenges in cost inflation, funding shortage, and demand uncertainties. The company plans to invest heavily on infrastructure and R&D staff. The stock trades at 30+ times our 2012e earnings which has already discounted in 50%+ earnings growth, in our view." Morgan Stanley maintains its Equal-weight rating on Baidu.com, which closed yesterday at $141.83.