BIDU is best known for its massive share of the Chinese search market. Some analysts estimate that BIDU has over 80% of China search. This is arguably a function of America’s GOOG deciding to leave China because of an ethical dispute, but either way this is in the past and the market looks into the future. The future of search is perhaps in our hands…our mobile devices. China’s massive population and technologically savvy culture demands efficient mobile devices. One of the most basic capabilities of today’s mobile device is the ability to search.
BIDU is estimated to own nearly 35% of the Chinese mobile search market. This is not much compared to normal search market share, but it is a start…a monopoly is not built overnight. BIDU is making efforts in order to further dominate this market; these efforts include the development of a mobile operating system and acquisition of specific smaller firms.
Credit Suisse recently downgraded BIDU. The call was essentially because the firm thought the risk of acquisitions would not be good for the stock. The rest of the analyst community is estimating that BIDU will make $7.40 this fiscal year. This estimate multiplied by the median PE (19x) puts BIDU at $140…about $30 of upside potential. One should not ignore the technical picture however. The 200 DMA is right above us and we are also extended, according to the channel.
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