Here's Why Baidu, Inc. Shares Will Bounce to $230

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Baidu, Inc.  (NASDAQ: BIDU  ) gained 4% today after the Chinese Internet search giant posted strong quarterly results and received a neutral-to-buy upgrade from Deutsche Bank.

So what: Along with the upgrade, analyst Alan Hellawell III boosted his price target to $229 (from $178), representing about 43% worth of upside to yesterday's close. So while momentum traders might be turned off by Baidu's price sluggishness in recent months, Hellawell's call could reflect a growing sense on Wall Street that its prospects are becoming too cheap to pass up.

Now what: According to Deutsche, Baidu's risk/reward trade-off is particularly attractive at this point. "Baidu continues to guide upbeat top line at 56%-60% YoY for 2Q, beating cons. by ~4%," said Hellawell. "Despite a purported heavy investment plan for the rest of FY14, we believe the market has underestimated BIDU's viability and is overly conservative on its growth /earnings outlook. We believe it is unjustified for BIDU to trade at a significant discount vs. peer avg amid steadily improving fundamentals." When you couple Baidu's cheapish valuation with its still-rock solid financial position, it's tough to disagree with Deutsche's upgrade. 

Upgrade your portfolio with three stocks poised to be multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multibagger stocks like Netflix time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2930044, ~/Articles/ArticleHandler.aspx, 9/1/2015 4:06:28 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Pacampara

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated 6 hours ago Sponsored by:
DOW 16,528.03 -114.98 -0.69%
S&P 500 1,972.18 -16.69 -0.84%
NASD 4,776.51 -51.82 -1.07%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/31/2015 3:59 PM
BIDU $147.25 Down -4.88 -3.21%
Baidu CAPS Rating: ****