Chinese search giant, Baidu Inc., plans to form a standalone electric vehicle (EV) company with Chinese automaker, Geely, according to Reuters.
Two sources familiar with the matter told Reuters that Baidu (BIDU) will be the majority stakeholder and focus on the software side, while Geely will take a minority stake in the company and will be responsible for manufacturing the vehicles.
Both Baidu and Geely (GELYF) have declined to comment, according to Reuters.
Baidu shares ended the day up 2% on Jan. 8, while shares of Geely climbed 8% in the US trading and almost 20% in Hong Kong following the Reuters report.
Reuters already reported last month that Baidu was interested in developing its own EVs, following other technology firms including Amazon, Apple and Alphabet, who have all made in-roads into the EV market, either by investments or the development of auto-related technology. (See BIDU stock analysis on TipRanks)
Loop Capital analyst Rob Sanderson reiterated his Hold rating on BIDU two weeks ago and raised his price target from $150 to $210. The new price target suggests that BIDU shares are fully priced at current levels.
Sanderson increased his price target after Baidu received the green light for its Baidu-Apollo project to carry out “unmanned” driving tests in Beijing, a significant milestone in the pursuit of achieving self-driving cars without safety drivers.
Consensus among analysts is a Strong Buy based on 11 Buys and 2 Holds. The average price target of $183.77 implies downside potential of around 12% over the next 12 months.
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