Will Baidu Deliver EPS Growth This Quarter? Crowd & Experts Disagree

Shares of Baidu Inc (ADR) BIDU were down about 1 percent on Wednesday as the company readies to report its first quarter financial results after the bell.

According to Estimize, the crowd expects to see year-over-year growth in EPS while experts anticipate a small decline. The crowd projects EPS of $1.30 on revenue of $2.031 billion, versus EPS of $1.24 on revenue $1.528 billion reported in the first quarter of 2014. The Street models consensus EPS of $1.13 on revenue of $1.914 billion.

Related Link: 19 Chinese Internet Stocks That Have Wall Street Talking

The graph above illustrates Baidu’s history of actual earnings compared to estimates. Over the past four quarters, the company has either met or beat Wall Street estimates.

The second chart illustrates how estimates have changed over time. Both Wall Street and Main Street have lost confidence in Baidu’s performance over the quarter. However, the crowd has remained considerably more bullish than the Street.

The Street Is Still Bullish

In a recent report, analysts at Summit Research initiated coverage of Baidu with a Buy rating and $256 price target.

“Baidu is the leading Chinese language search provider. Guo believes that the company is well positioned to take ‘a more dominant position’ of the Chinese internet space (computers and mobile) going forward. Baidu already has ‘solid control of mobile traffic gateways, including mobile search, mobile map, and mobile apps distribution,’ the analyst explained.”

The firm expects revenue growth for 2015 and 2016 of 36 percent and 35 percent, respectively. Non-GAAP EPS estimates for the two years are $7.30 and $10.24, respectively.

Pacific Crest Securities also weighed in on Baidu. Analysts maintained an Overweight rating and $260 price target.

“The company is likely to announce its Q2 revenue guidance at least in-line with investor expectations of 38.6 percent y/y growth. The analysts believe this will provide ‘more confidence around full-year revenue growth.

"We expect spending commentary to remain unchanged. Baidu gave full-year 2015 spending guidance on its Q4 earnings call. We expect guidance to remain unchanged despite what we expect to be heightened spending seasonality in Q1. We continue to see heavy investment in business and products, such as like Baidu Connect, Nuomi, car services, food delivery and others, that should get Baidu closer to the transaction in 2015 and beyond.’"