Bai-Do's And Bai-Don'ts From Baidu Earnings

Shares of Baidu Inc (ADR) BIDU tumbled Thursday morning, after the company reported its first quarter financial results Wednesday afternoon.

Earnings came in short of estimates, at $1.22 per share (Rmb 7.77), and revenue, at $2.053 billion (Rmb 12.72 billion), slightly above consensus.

The Estimates

According to Estimize, the crowd expected to see year-over-year growth in EPS while experts anticipated a small decline. The crowd projected EPS of $1.29 on revenue of $2.023 billion, versus EPS of $1.24 on revenue of $1.528 billion reported in the first quarter of 2014.

The Street modeled consensus EPS of $1.13 on revenue of $1.914 billion.

Related Link: Credit Suisse Reviews Baidu's Earnings

Wall Street Says…

A couple of Wall Street research firms have already weighed in on Baidu’s results.

Analysts at Brean Capital attributed the mixed results and slightly soft second quarter revenue guidance to the growing contribution of mobile, which accounted for approximately half of the quarter’s revenue, but yielded lower monetization rates than the PC segment.

The firm says that, “despite a slower start, Baidu’s underlying fundamentals seem to be intact.”

The analysts are “particularly encouraged that mobile continues to deliver strong growth, predominantly driven by search, and that Baidu has made a consistent effort in educating/facilitating advertisers’ needs, strengthening its dominance as a key mobile gateway, and building an ecosystem by offering products and services to close the loop.”

Credit Suisse analysts also commented on the results.

Revenues were largely in-line with the firm’s estimates, but earnings came in above their projections. On the bright side, the analysts highlight (1) better first quarter margins; (2) nice progress in O2O initiatives; (3) mobile revenue surpassing 50 percent.

On the flip side, they did not like the in-line first quarter revenue and the weak second quarter revenue guidance.

Credit Suisse maintains an Outperform rating and a $252 price target on Baidu. Brean has a Buy rating and a $250 price target.