24/7 Wall St. » Baidu.com

Can Baidu.com Recapture Its Earnings Mojo? (BIDU)

247wallst — Wed, 13 Feb 2008 12:36:00 +0000

After today’s close we’ll get to see earnings out of Chinese internet search leader Baidu.com, Inc. (NASDAQ: BIDU). The estimates from First Call are $0.71 EPS on $77.1 million in revenues. Last quarter, the company gave guidance of $74.7 million to $76.7 million in revenues and EPS targets around the time were $0.70 EPS.

Next quarter estimates are $0.64 EPS on $77.01 million in revenues. Estimates for fiscal 2008 are $4.15 EPS on $435.48 million in revenues.

Options traders appear to be braced for a move of up to a range of $15.00 to $18.00 in either direction. Baidu’s chart has been out of its explosive uptrend for more than a month now and shares have actually pulled back some $150.00 from highs. To make matters more interesting, Baidu has been spending recent trading sessions under its 200 day moving average that is currently listed as $254.68. The 50-day moving average is all the way up to $330.57. Recent lows were roughly $225.00 in recent days. As of last look, the short interest for January-end in Baidu shares was listed as 3.234 million shares, up almost 40% from mid-January levels.

When this stock was busy going ballistic last year we noted how the valuations were becoming similar to the old tech-bubble days. Even after the huge pullback that has been seen, the stock is not cheap by most standards. With a $8.4 Billion market cap, this trades at 105-times current earnings and almost 60-times projected 2008 earnings. On a revenue basis, this trades at 36-times current revenues and trades at 19-times projected 2008 revenues. The question is how much traders are willing to pay for one of the greatest internet growth stories in China. That answer varies from source to source and from trader to trader.

There can always be the duel of which will matter most between high valuations and a huge sell-off, but we still would think the company will have to beat earnings projections handily and maintain strong guidance to support the current share price and valuations. Analysts have an average price target north of $379.00, which is still roughly 50% higher than today’s prices. Baidu.com, Inc.’s 52-week trading range is $92.80 to $429.19.

In the Year of the Rat, Baidu better make sure rats aren’t chewing on the fiber optic cables in China.

Jon C. Ogg
February 13, 2008

Baidu.com’s Guidance Mystifies Recent Gains (BIDU)

247wallst — Thu, 25 Oct 2007 16:25:57 +0000

Baidu.com (NASDAQ:BIDU) is not following Microsoft or Google shares up in the post-earnings cycle. Its $24.2 million in net income translated to $0.70 EPS and its Revenues came in at $66.3 million. Estimates were $0.63 EPS and $65.5 million plus on revenues.

GUIDANCE: Baidu currently expects to generate total revenues in an amount ranging from $74.7 million to $76.7 million for the fourth quarter of 2007. That represents a 106% to 112% increase from the corresponding period in 2006 and a 13% to 16% increase from the third quarter of 2007. First call had Next quarter estimates are $0.70 EPS on $75.7 million revenues.

This was a beat on this quarter earnings but it is just an in-line revenue guidance, and that should NOT justify the high valuations and unbelievable performance. 24/7 Wall St. recently gave some "lessons of the bubble" on its lofty valuations. Of course, we’ve warned that logic hasn’t been applicable to this stock. Shares closed down 0.5% at $334.30 in normal trading, but shares are down 4% at $321.00 in after-hours trading.

Unless the Baidudians are holding back some incredible good news, this could give back even much more of those recent gains. Its valuation is nearly 30-times 2008 revenues and forward earnings 2007 ($2.22) and 2008 ($3.80) targets on EPS before earnings were released gave the Chinese internet beast forward P/E’s of 155 and 90 respectively. Its last short interest reading was listed as 2.829 million shares, down from 3.03 million shares short at the end of September. There is no doubt at all that there is a significant value to Baidu.com even if the guidance is only in-line. We just question the current valuations based upon the monster 75% stock surge seen since August and 200% gains this year.

Cramer called this one a "Cheap Expensive Stock"
It ran 8 days in a row, and continued on up….

Jon C. Ogg
October 25, 2007

Jon Ogg is the editor of the 24/7 Wall St. Special Situation Investing Newsletter; he does not own securities in the companies he covers. Free email sign-ups can be accessed here.

Baidu.com Up Eight Straight Days, Can It Continue? (BIDU, SINA, SOHU, NTES)

247wallst — Wed, 19 Sep 2007 20:16:44 +0000

Baidu.com, Inc. (NASDAQ:BIDU) is one of these stocks that is pretty amazing when you look at its trading activity and its volume. BIDU stock closed up Wednesday another 2.6% at $275.95 on 11.8 million shares, which is another yearly high and more than double average daily volume. This wouldn’t be a big day on a percentage stock move basis alone unless you look at how it has been trading of late.

This stock has managed to close up for Eight consecutive days from its last down day on September 2, 2007 when shares closed at $213.64. Here are the descending closing prices from before Wednesday: $268.79; $252.89; $234.88; $232.47; $230.12; $227.04; $218.10; $213.64. But compare that to dates below and this one looks amazing. If you compare this to lows in the past months it becomes "exuberant":

Lowest close August: $168.89 on August 16, 2007
Lowest close July: $175.04 on July 24, 2007
Lowest close June: $135.64 on June 12, 2007
Lowest close May: $121.35 on May 1, 2007
Lowest close April: $93.523 on April 2, 2007
Lowest close 52-Week: $87.28 October 2006

Obviously this one has everything going for it. It is a hot stock for sure, but it is a hot web search engine stock in the even hotter Chinese market. The overly obvious is that one incredible quarter is being priced in. Should we dare we mention the hype from the coming 2008 Olympics? But what else could be coming besides that? Obviously a stock splitcomes to mind, but what else?

It’s impossible to know what the shortinterest is in BIDU now in September, but the August short interest wasonly listed as 2.799 million shares. Its market cap is nearly $9.4Billion. If you trust Alexa rankings(not perfect at all, certainly on foreign sites) on mostly a pureChinese play, the numbers are actually looking lower in the grandscheme of things, but the compete.com rankings still show it growing.

Withconsensus earnings for 2007 at $2.20 EPS and 2008 at $3.67, this tradeswith forward price/earning ratios of 125.4 for 2007 and 75.2 for 2008.Based upon revenue expectations for 2007 of almost $223 million and2008 of $394 million, the projected price/revenues multiples aremassive at 42.1-times 2007 revenues and 23.9-times 2008 revenues. Ifthe company blows out the next quarter then those extremely highmultiples will just look very high.

Some analyst targets wererecently raised as RBC Capital now has a $333 target on its outperformrating and Piper Jaffray has a $252 target on its Outperform rating.

Arethe comparables in China up the same 200+% like BIDU? Shares ofSohu.com Inc. (NASDAQ:SOHU) with its $1.45 Billion market cap are upalmost 100% from its lows of the year, shares of Sina Corp.(NASDAQ:SINA) with its $2.6 Billion market cap are also up almost 100%from 52-week lows, and lastly Netease.com Inc. (NASDAQ:NTES) shareswith its $2.2 Billion market cap are up "only" 23% from 52-week lows.These other large Chinese web and Internet stocks are outperforming themarket, but lagging far behind the meteoric rise seen in BIDU shares.

Withoptions expiring Friday, this is going to be one to watch. There wereover 12,000 contracts of the SEPT $280 Calls that traded alone,although there were over 9,700 contracts of the SEPT $270 PUTS thatchanged hands. October options contract trading is far lighter, butwith a $20.10 last print on the OCT $280 Calls it isn’t too hard tofigure out why.

Can an eight day run turn into nine, ten, orfifteen? Yes of course. But when you see moves like this in apost-Dot.Com and year 2000 stock trading frenzy, it’s hard not toscratch your head. Regardless of if the trend continues or reverses,Thursday and Friday should be exciting days for Baidudians.

Jon C. Ogg
September 19, 2007

SINA Doesn’t Make The Grade (SINA, SOHU, BIDU)

247wallst — Mon, 06 Aug 2007 16:19:09 +0000

SINA Corporation (Nasdaq:SINA): Non-GAAP net income was $16.1 million or $0.27 diluted non-GAAP and $0.25 GAAP EPS; net revenues increased 11% year over year to $59.8 million, within the upper range of the Company’s guidance of between $58.0 million and $60.0 million. Estimates were $0.24 non-GAAP EPS & $59.6 million in revenues. Non-advertising revenues for the second quarter of 2007 totaled $18.6 million, a 23% decrease from the same period in 2006 and a 5% decrease from the previous quarter. Gross margin for the second quarter of 2007 was 62%, compared to 63% in the same period last year and 59% in the last quarter.

SINA’s guestimates are total revenues for the third quarter of 2007 to be between $63.0 million and $65.0 million, with advertising revenues to be between $45.0 million and $46.0 million and non-advertising revenues to be between $18.0 million and $19.0 million. Stock-based compensation for the third quarter of 2007 is expected to be approximately $1.7 million, which excludes any new shares that may be granted. Unfortunately consensus estimates are $64.75 million and that isn’t going to cut it for a high-beta and high-growth Chinese web company.

The soft revenues and soft guidance has shares down over 5% in after-hours trading to $39.50. SINA’s 52-week trading range is $21.70 to $47.05. This has shares of Sohu.com (NASDAQ:SOHU) down almost 1% and Baidu.com (NASDAQ:BIDU) down 0.3% in after-hours trading.

Jon C. Ogg
August 6, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.