Baidubell

Image source: Baidu. 

A skeptic on Baidu (NASDAQ:BIDU) still has his doubts. Summit Research analyst Henry Guo lowered his price target on shares of China's leading search engine yesterday.

Concerns about competitive ad platforms, Baidu's foray into profit-gnawing online to offline -- or O2O -- initiatives, and a lack of near-term relief for diminished margins are driving the move. Guo is lowering his price target from $189 to $165. Summit is sticking to its ho-hum "hold" rating. 

The stock still closed higher yesterday despite the analyst move. Investors know that Wall Street pros don't always get it right. In Guo's case, the stock has risen 21% since he downgraded the stock from "buy" to "hold" in late September. 

This doesn't mean that he's wrong this time. Baidu hasn't given the market any reason to think that its contracting margins will return to their chunky former glory anytime soon. Baidu's stock may be been trouncing the market since bottoming out this past summer, but it's not as if the fundamentals have necessarily ascended with the stock price. 

Wall Street's been hosing down Baidu's profit targets through 2015, and Guo thinks that we'll be seeing more of the same when Baidu reports financial results next month. He feels that his peers are being too optimistic with their forecasts for 31% year-over-year top-line growth in the first quarter. Adding insult to injury, Guo feels that other advertising platforms are gaining market share at Baidu's expense. 

There will clearly be a lot riding on Baidu's fourth-quarter report in a few weeks. Looking back will be huge, especially since analysts see earnings growing faster than revenue. We haven't seen that since the third quarter of 2012, according to S&P Capital IQ data.

We may not have to wait until Baidu's report to get a better read. Sohu.com (NASDAQ:SOHU) is reporting financial results on Feb. 1. Baidu hasn't scheduled its call just yet, but it has historically taken place later in the month. Sohu is primarily an online portal, but it's also the parent company of China's third largest search engine, Sogou.

Sogou has been growing at a heady clip. Revenue climbed 53% for Sohu's search engine in its previous quarter -- well ahead of Baidu's pace -- but that's more the result of Sohu's improving monetization than market share gains. Sohu's results won't seal Baidu's fate, but any upbeat developments in terms of guidance can suggest general improvement in China.

There's plenty riding on Baidu in the coming weeks, and at least one Wall Street pro is asking to get off.   

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Baidu. The Motley Fool recommends Sohu.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.