UPDATE: Bank of America Reiterates Buy Rating, Raises PT on Baidu on Confidence in New Bidding System

In a report published Wednesday, Bank of America analyst Eddie Leung reiterated a Buy rating on

, and raised the price target from $158.00 to $177.00. In the report, Bank of America noted, “In our meeting with Baidu last week, the company indicated their confidence in the new advertiser-facing keyword bidding system, launched in 2Q13, to drive mobile revenue. The system enforces a minimal keyword bid price for mobile traffic, which is set at 10% of the bid price for the same keyword on PC. Hence, advertisers will have a chance to obtain an ad listing on mobile of any keyword they intend to buy on PC. They believe this can better induce advertisers to test the water on mobile. Management has seen no major pushback from advertisers and over 50% of their clients are already setting up a mobile landing page. Such progress provides support to our view that mobile should account for 22%/ 30% of search sales in 2014E/ 15E (Table 1), and an increase in estimated mid-term op income growth to a 14% 2014-17E CAGR from 11%.” Baidu closed on Tuesday at $158.64.