Baidu Investors Should Blame This, Stifel Says After Downgrading Shares

George Askew of Stifel on Thursday downgraded shares of

to Hold from Buy while removing a previous $250 price target and removing the company from the "Stifel Select List" following the company's fourth quarter results on Wednesday. Askew notes that Baidu's fourth quarter revenue growth was about in-line with expectations, but adjusted EBITDA and cash earnings per share both fell short of expectations. At the same time the company provided a weak guidance for first quarter revenue growth which can be blamed on the "rapid" mix shift from PC to mobile search queries. Mobile queries monetize at an estimated 60 percent to 70 percent of PC monetization, hence faster mobile growth dilutes revenue growth, according to Askew who adds that mobile queries topped 50 percent of total queries in the third quarter and climbed higher in the fourth quarter. "Compounding the problem is the Chinese New Year holiday, which is in late February this year," Askew wrote. "Most advertisers don't firm up advertising budgets until after the holiday, reducing overall revenue and visibility. Finally, users use mobile devices more during the holiday, supporting revenue growth but at a lower monetization."