Baidu Inc (ADR) BIDU reported 1Q16 results in-line with expectations. Goldman Sachs' Piyush Mubayi maintained a Buy rating for the company, while reducing the price target from $240 to $238. The analyst mentioned that Baidu's investing for growth now includes autonomous driving, or AD,
Baidu reported its 1Q16 revenue at Rmb15.8bn, representing 31 percent y/y growth. Non-GAAP diluted EPADS came in at $1.06, in-line with consensus. The company guided to 2Q revenue of Rmb20.1-20.6bn, reflecting 30 percent growth at the mid-point, also in-line with expectations.
Mobile contributed 60 percent of the quarter's total revenue, analyst Piyush Mubayi said. Core search non-GAAP operating margin came in at 50.3 percent, 1.2pp lower than the 4Q15 level. O2O and iQiyi caused the margin to contract.
Autos: Investing For Growth
During the earnings call, management compared the potential for autonomous driving to that of O2O, where Baidu’s technologies are its competitive advantage, Mubayi mentioned.
“Baidu AutoBrain, the core of Baidu's autonomous driving technology, includes highly automated driving (HAD) maps, positioning, detection, and smart decision-making and control. Under this unit, Baidu formed a self-driving car team in Silicon Valley focused on R&D, and testing with a team of 100 engineers by Dec 2016,” the Goldman Sachs report noted.
Baidu has released the autonomous vehicle [AV] prototypes and announced the commercial launch of L3 or L4 AVs in coming years. Mubayi commented that the global ADAS/AV parts market is estimated to reach $100bn by 2025.
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