The market's been rallying through most of the past three weeks, but not for (NASDAQ:BIDU) investors. China's leading search engine hit a fresh 52-week low yesterday, and it's clear that the financial media is not impressed.

Just check out some of the headlines surfacing this week:

  • "Is Another Shoe Dropping at," writes 24/7 Wall Street.
  • "Baidu May Not Be a Bargain Yet," opines
  • "Baidu: Street Estimates are Heading South," says Barron's.

Meanwhile, Baidu's rivals in China -- including Google (NASDAQ:GOOG) and parent (NASDAQ:SOHU) -- are climbing.

Life isn't getting any easier for the company; it talked down its current quarter's revenue targets this morning. Baidu is now expecting to generate fourth-quarter revenue of $131 million to $133 million, nearly 15% lower than its original guidance.

I'll go out on a flimsy limb and call bottom, even if my contrarian ways are as fashionable as a Members Only jacket.

It's still a bit nippy outside
Don't get me wrong. Baidu will pay the price for its ethical blunders. The company's been raked over the coals for taking on unlicensed medical advertisers, and while it's cleaning up its act, Baidu concedes that booted sponsors did account for 10% to 15% of the company's revenue. It has also suspended questionable advertisers in other areas, though some of the original unlicensed pharmaceuticals companies have gone legit and submitted their licenses to Baidu.

Losing those dubious advertisers hurts, badly. It also stings to see Goldman Sachs, JPMorgan, and Pacific Crest all lower their profit targets on Baidu over the past week.

The overall consensus is that Baidu will take a hit if it becomes more like Google in ad placement and sponsor standards, but I don't see it that way at all.

Market research firm Analysys International projects that Baidu scored 63.4% of China's search-engine revenue in the third quarter, compared to a 27.8% slice for Google. Rival market-watcher China IntelliConsulting pegs the search-engine-query market share as 65.8% for Baidu, and less than 27.8% for Google. So why is Google able to milk more revenue from its search queries?

How is a combination of Baidu's popularity with Google's monetization a bad thing? As long as the user base doesn't stray, Baidu could possibly outsource paid search through Google's AdSense program -- the way that Yahoo! (NASDAQ:YHOO) wanted to do domestically -- and still increase already healthy margins.

It's all about taking chances
Uncertainty is runs deep, since we still don't know the full fallout here. If Chinese citizens keep visiting the hometown favorite, advertisers are unlikely to walk away. The next two quarterly reports will be critical in that regard.

However, let's put today's value into proper perspective. Baidu shares took a knock last Friday, after Goldman Sachs analyst James Mitchell hosed down his profit targets. His 2008, 2009, and 2010 profit-per-share targets are now $4.81, $6.60, and $8.54, respectively.

Are you kidding me? The analyst that started the slashing parade expects earnings to grow by 37% next year, and 29% the following year, and I'm not supposed to notice the attractive prospects of picking up Baidu at just 13 times Mitchell's 2010 earnings estimate?

Like a bull in a China shop
There are certainly plenty of cheap growth stocks in China these days. Travel portal leader Ctrip (NASDAQ:CTRP) is now fetching just 21 times next year's earnings. Online job listings specialist 51job (NASDAQ:JOBS) is a steal at 16 times forward profitability. Want something even cheaper? Online gaming play GigaMedia (NASDAQ:GIGM) is now down to a ridiculous six times Wall Street's 2009 bottom-line forecast.

However, there is something special about Baidu. Search remains the most lucrative niche in cyberspace, and no one is even close to Baidu in China at the moment. Calamity has created an opportunity.  

Naturally, I may revisit my bullish position if more bad news hits the fan, or if analysts slash deeper. But with the cards I see on the table now, I have no problem calling bottom here. Baidu may have been bad, but its valuation is too good to pass on right now.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.