Baidu Q2 Misses Estimates, Analysts Slash Price Targets

Baidu Inc. reported disappointing second-quarter results on Tuesday.

The company reported revenue of RMB 31.3 billion, down 4% year-over-year, missing analyst estimates of $4.65 billion.

GAAP diluted earnings per American Depositary Share were RMB 5.74. Adjusted earnings per ADS were RMB 7.22, missing analyst estimates of $1.35.

Baidu Core revenue declined 4% to RMB 25.2 billion. Its operating margin was 12%, with adjusted operating margin at 15%. Meanwhile, iQIYI revenue declined 5% to RMB 6.3 billion. The segment posted a negative 2% operating margin, with adjusted operating margin roughly flat.

Baidu CFO He Haijian said: "There were several highlights this quarter. First, Baidu Core's AI-driven business revenue reached RMB 12.5 billion, continuing to account for half of Baidu Core's revenue. Second, Baidu's operating cash flow remained positive for the fourth consecutive quarter, reaching RMB 3.4 billion in Q2. Third, we are advancing our dual primary listing conversion in Hong Kong, which is expected to take effect within the year." Looking ahead, we remain committed to investing in AI as the core driver of Baidu's long-term growth.

Baidu shares rose 1.5% to $92.26 on Wednesday.

The following analysts adjusted their price targets on Baidu following the earnings release.

Morgan Stanley analyst Gary Yu downgraded the stock from Equal-weight to Underweight, cutting the price target from $130 to $80.

Barclays analyst Jiong Shao maintained an Equal-weight rating on the stock and cut the price target from $124 to $96.

Benchmark analyst Fawne Jiang maintained a Buy rating on the stock and cut the price target from $215 to $150.

Considering buying BIDU stock? Here's what analysts say.