UPDATE: Credit Suisse Downgrades Baidu to Underperform on Competition Concerns
Credit Suisse lowered its rating on Baidu (NASDAQ: BIDU) from Neutral to Underperform and lowered its price target from $118 to $83.
Credit Suisse commented, "Baidu is facing multiple challenges: (1) a weaker-than-expected advertising market; (2) intensifying competition from new entrants; and (3) difficulty to monetise mobile search traffic. We believe rising competition, particularly from Qihoo, will lead to: (1) a lower market share, as advertisers will use the competitors' keyword prices as reference; and (2) lower margin, as Baidu will need to pay higher salaries to keep top engineers and needs a higher traffic acquisition cost (percentage of revenue), as competitors will try to cooperate with Baidu's third-party websites. Separately, according to industry sources, mobile search accounted for 30%+ of Baidu's traffic which is likely to rise to 50% in 3Q13. But the company generates only 2–3% of total revenue from mobile search."
Baidu closed at $114.29 on Monday.
Latest Ratings for BIDU
|May 2015||JP Morgan||Downgrades||Overweight||Neutral|
|May 2015||T.H. Capital||Upgrades||Hold||Buy|
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.