Brean Capital set a target price of $196 for Baidu, Inc. (NASDAQ:BIDU), the Chinese Internet search provider, and reiterated a Buy rating, even though the Chinese tech giant still suffering from health-related ads issues.
Fawne Jiang, analyst from Brean Capital, expects the company will recover in 2017. "Company expects the customer verification process for all categories to be completed by the end of 2016. As such, core search growth will likely gradually recover going into 2017 with overall better sentiment, a higher quality customer base and company’s refocus on operation and acquiring new customers." Fawne Jiang noted following investor calls with management.
2016 is a tough year for Baidu. The company lowered its guidance for the year and posted the first year-over-year revenue decline for the third quarter. The company even saw larger decline in revenue in the forth quarter.
The Chinese search giant had been suffering since a college student died after he went to a cancer treatment that Baidu promoted on top of its search and the treatment ultimately failed. After that, the government placed tighter regulatory scrutiny for its health-related ads.
But analysts expected that Baidu’s core business will recover in 2017 and its less profitable video business will also improve in the next year.
Baidu’s shares fell 0.8 percent to $163.61 at 1:58 p.m. in New York and the stock only has a P/E ratio of 12.43x.