Baidu Likely to Face Headwinds from Elevated Investments, Weaker Advertising Rev

Dow Jones
08/19

0540 GMT - Baidu is likely to face near-term headwinds, according to Nomura analysts in a research note. The company's 2Q revenue came largely in line with low market expectations but adjusted net profit missed expectations, the analysts say. "Given the combination of elevated investments and weakening advertising revenues, we project operating profit margin to moderate further to 9% in the third quarter from 15% in the second quarter," they note. Investors will closely watch its upcoming chip unit listing. Nomura maintains its buy rating, but cuts the target price on its ADRs to US$154.00 from US$170.00. Its ADRs last traded at US$90.87.

 

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