Why Credit Suisse Sees More Upside For Baidu Now

Baidu Inc (ADR) BIDU shares have appreciated 33.23 percent over the past three months, from a low of $132.35 on September 23.

Dick Wei of Credit Suisse has maintained an Outperform rating on the company, while raising the price target from $210 to $251.

Wei expressed optimism regarding the company’s new corporate structure and focus on internet finance.

Analyst Dick Wei mentioned that the formation of Financial Services Group, “which combines Baidu's various internet finance initiatives— includes Baidu Wallet, consumer finance, and internet securities.”

Other structural changes announced by Baidu include Baidu Tieba and the mobile gaming business moving into Mobile Service Group, Hao123 moving into Search Service Group, the marketing, PR and government relations team reporting to the G.M. of Emerging Business Group, and the music, video, literature and lottery businesses moving to the strategy department.

“These changes will enable Baidu to focus on key resources and improve operational efficiencies,” Wei stated while expressing optimism regarding “Baidu consolidating all finance-related operations into a single FSG.”

Wei also mentioned that Nuomi has continued to gain traction, with China’s groupbuy market reaching Rmb55.35 billion in 3Q15, representing 150 percent year on year growth. Nuomi has achieved 20.1 share of this market, while attaining 11.2 percent share of the online movie ticket market.

Wei also expressed positivity regarding the company’s continued investments in internet finance initiatives. The company announced a one percent cash back for all payments on November 18, 2015, which is likely to drive growth. The company has also announced a partnership with China Citic Bank to launch a direct sales bank.

The company has seen strong growth for Baidu Wallet and Iqiyi, which Wei believes was driven by Baidu’s “strong content pipeline, both through third-party acquisitions and self-production, many of which are exclusive.”