Baidu Margin Recovery to Drive Positive EPS Revisions – JPMorgan
2022.09.01 20:42
Baidu (BIDU) Margin Recovery to Drive Positive EPS Revisions – JPMorgan
By Sam Boughedda
Shares of Baidu (NASDAQ:BIDU) were upgraded to Overweight, with the price target raised to $200 from $160 per share at JPMorgan (NYSE:JPM) after the close on Wednesday.
An analyst told investors in a note that the company’s margin recovery will drive positive EPS revisions.
“We raise our 2022/23E EPS by 20%/22% post 2Q22 results due to 1) ads growth having bottomed in 2Q22, followed by meaningful recovery expected in 2H22, 2) a stronger profit outlook due to cost optimization,” explained the analyst.
According to the analyst, Baidu’s share price strongly correlates to group-level earnings revisions.
“Earnings cuts since 2Q21 account for the majority of the share price decline (Bloomberg consensus for 2022 adj EPS has been cut by 42% since Apr 1, 2021 vs. 37% share price decline and 3% increase in MSCI China during the same period), in our view,” added the analyst. “We expect upward revisions to earnings estimates (JPMe 2022/23E adj EPS is 27%/25% higher than Bloomberg consensus), which should in turn drive stock price upside.”
