Earnings Previews: Baidu, Home Depot, iQiyi, Macy's, Walmart

Baidu

China’s largest internet search engine, Baidu Inc. (NASDAQ: BIDU), saw its shares jump by more than 70% in 2020 while suffering a decline of nearly 15% so far in 2021. Three of Cathie Wood’s ARK Invest ETFS owned 2.26 million shares of the company’s stock at the end of December. As of Thursday, ARK invest had cut its holdings of Baidu by more than 50% to 1.05 million shares.

Like other large Chinese internet companies, Baidu has also run afoul of the Chinese government, in this case for collecting personal information that was not relevant to the company’s service. No fines have been announced yet. The company has started its own electric vehicle unit named Jidu Auto that is supposed to deliver its first vehicle in three years.

Analysts are mostly bullish on the stock, with 19 of 33 rating the shares a Buy or Strong Buy. Given its steep price drop, the stock now trades near $185, about 86.6% below its consensus price target of $345.48. The implied upside on the shares based on a high target of $450 is 143%.

Consensus estimates call for $1.66 in EPS on revenue of $4.22 billion for the first quarter. The full-year forecast calls for EPS of $10.19 on sales of $19.65 billion, a year-over-year increase of 3.8% in EPS and 19.5% in sales.

The stock trades at a multiple of 2.8 times expected 2021 EPS, 2.3 times estimated 2022 earnings and 1.9 times estimated 2023 earnings. The stock’s 52-week range is $94.90 to $354.82. The average daily trading volume is about 13.1 million shares. Baidu does not pay a dividend.

iQiyi

Beijing-based iQiyi Inc. (NASDAQ: IQ) is an online streaming video platform in the People’s Republic of China. The stock lost more than 17% in 2020 and has traded down another 26% in 2021. Baidu is the majority owner of iQiyi, often called the Netflix of China. Like its namesake, the company has branched out from being a broadcaster to being a content producer as well. The problem the company has to face is how to keep investors interested until it can start producing profits, an experience not due for about five years.

Of 29 ratings, 17 brokerages rate the stock a Buy or Strong Buy, likely due to the wide gap between a current price of around $12.80 and a consensus price target of $24.10. That’s good for an implied upside on iQiyi of 88%. At the high target of $30.20, the upside potential is about 136%.

Analysts expect the stock to post a per-share loss of $0.36 on revenue of $1.18 billion in the first quarter. For the full year, the per-share loss is forecast at $1.20 on sales of $5.04 billion.

iQiyi is not expected to post a profit in any of 2021, 2022 or 2023. The stock trades at a multiple of 2.4 times expected 2021 enterprise value-to-sales (EV/S), 2.1 times estimated 2022 EV/S and 1.8 times estimated 2023 EV/S. The 52-week range is $12.14 to $28.97, and the average daily trading volume is about 21.3 million shares.

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Macy’s

What investors are likely to want to hear from Macy’s Inc. (NYSE: M) when the venerable retailer reports results Tuesday is whether the upward trend in revenue is going to continue. After a sales decline of 60% in the April quarter last year, revenue has been rising steadily to come in at $7.04 billion in the prior quarter, compared to just $3.15 billion in the year-ago second quarter. Macy’s also will have to commit more to its e-commerce business.

Most analysts (16 of 22) have a Hold rating on the stock. The shares currently trade at around $17.60, well above the consensus price target of $13.65. The high target is $20, implying upside potential of 13.6%.

Analysts expect the company to post a per-share loss of $0.42 in the quarter, sharply better than the $2.03 per-share loss in the year-ago quarter. Revenue is expected to rise by 44% to $4.34 billion. For the full fiscal year ending next January, analysts forecast EPS of $0.78 on revenue of $20.69 billion.

Macy’s stock trades at 21.9 times expected fiscal 2022 EPS and 15.7 times estimated 2023 estimated earnings. The stock’s 52-week range is $4.80 to $22.30, and the average daily trading volume is 16.9 million shares. Macy’s suspended its dividend last year.