Baidu May Use Nasdaq Delisting To Boost Value – Report

Chinese tech stock Baidu (BIDU) may delist from Nasdaq and transfer to an exchange closer to China, such as Hong Kong, Reuters reports. According to three Reuters sources, Baidu would use the move to boost its valuation as tension continues to escalate between the US and China over investments.

“For a good company, there are many choices of destinations for listing, not limited to the U.S.,” CEO Robin Li recently told the China Daily newspaper. 

On May 20, the Senate passed legislation forcing US-listed companies to confirm that “they are not owned or controlled by a foreign government.”

Shares in Baidu are currently trading down 14% on a year-to-date basis, and 43% on a three-year basis.

“We believe the shares are undervalued, as we estimate core EBITDA growing 23% in FY21. Target assumes 7x ’21E core EBITDA vs. our 10x target multiple for Google core search” pointed out Oppenheimer analyst Jason Helfstein, as he reiterated his buy rating with a $155 price target (43% upside potential).

Indeed Baidu scores a bullish Strong Buy consensus from the Street, with an average analyst price target of $147 (35% upside potential). (See BIDU stock analysis on TipRanks).

The ‘Google of China’, as Baidu is sometimes known, has just reported solid first quarter earnings, with Q1 Non-GAAP EPS of $1.25 beating consensus expectations by $0.69. Revenue of $3.18B dropped 7% from a year ago, but easily beat the $3.1 billion consensus.

Following earnings KeyBanc analyst Hans Chung ramped up his price target from $136 to $145. “Though ad demand for offline related business has not fully recovered from the COVID-19 pandemic, recovery is tracking ahead of expectations” he said.

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