Credit Suisse started coverage of Baidu at Outperform with a US$290 target price, pointing to a sharper focus on its core business, adding new features and new initiatives.
“Its core business maintains sustainable growth momentum thanks to its proven business model, while new features should enhance user experience and monetisation. Progress of new initiatives is in a nurturing phase,” the bank said in a note on Tuesday.
“Baidu is back to focus with a clear strategy leveraging on its technological strengths providing users and advertisers with better experience and higher return on investment,” it said.
It estimated search and news feeds together should growth 16-19 percent on-year in 2018 and 2019.
“We believe news feed users are more engaged with time spent being double that of search. Based on our estimates, the revenue contribution of news feeds should increase from 9 percent in 2017 to 14 percent in 2020,” it said.
The bank noted Baidu was investing in AI, with progress on new initiatives in conversational platform Duer OS and autonomous driving Apollo. Credit Suisse said it expected the company to focus on the software side, without incurring significant capital expenditure and using existing infrastructure.
In U.S. trade, the stock was up 1.18 percent at US$234.16 at 10:34 P.M. SGT.