Analysts earn their keep by updating their opinions and reassessing the fundamentals, so I shouldn't be surprised that Deutsche Bank analyst Alan Hellawell is at it again with Baidu (Nasdaq: BIDU).

Hellawell downgraded shares of China's leading search engine -- from "buy" to "hold" -- yesterday. Let's go over some of his previous moves on the stock:

The sum of Hellawell's moves has been spot-on:



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March 24, 2009



Oct. 12, 2009



Jan. 13, 2010



Aug. 23, 2010



See that? The last time that Deutsche Bank downgraded the shares, Hellawell was able to get his clients back on a few months later at a lower price point. Naturally, this doesn't bode well for longs.

However, most analysts are often too concerned with near-term price movements to grasp the bigger picture. Hellawell's near-term price target was a split-adjusted $21.10 when he upgraded the stock two springtime seasons ago. Baidu has gone on to nearly quadruple that figure. Even yesterday's downgrade came ironically saddled with an upward revision in Hellawell's target, from $80 to $86.

Baidu's meteoric rise -- nearly a 10-bagger since I unwaveringly recommended it to Motley Fool Rule Breakers subscribers three years ago -- has been fueled largely by its ability to trounce expectations. It seems as if every quarter forces the pros to increase their expectations.

Three months ago, Wall Street figured that Baidu would earn $1.21 a share this year and $1.88 a share in 2011. This morning, those net-income-per-share targets stand at $1.40 and $2.16, respectively. After a few quarters of chasing, the disparity can be dramatic. Remember Hellawell's $21.10 target last year? Did anyone dream that it would be less than 10 times projected earnings two years out?

Baidu was the dominant player in China, and Google's hesitancy has only cemented that position. Microsoft's (Nasdaq: MSFT) Bing, or to a lesser extent, Yahoo!, could have stepped in to replace Google as a Western alternative. Homegrown upstarts including's (Nasdaq: SOHU) Sogou could have stepped up their game. None of that has come to pass.

If Baidu's latest quarter is any indication -- with revenue soaring 74%, and earnings more than doubling -- the chase will continue, despite Baidu's seemingly lofty valuation at the moment.

Do you think Baidu is overvalued at this point? Share your thoughts in the comments box below.

Google and Microsoft are Motley Fool Inside Value selections. Baidu, Google, and are Motley Fool Rule Breakers recommendations. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz has only been to China once, but he relishes admiring its dot-com revolution from afar. He does not own shares in any of the stocks in this article. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.