Chinese technology company Baidu (BIDU) released first-quarter earnings that showed huge improvements from a year ago. It also issued an upbeat outlook for the second quarter.
Baidu is China’s top online search provider. It also offers cloud services and has expanded into the autonomous ride-hailing business, as well as providing online video streaming through its iQiyi subsidiary.
The company delivered Q1 revenue of 28.1 billion yuan, representing 25% year-over-year growth. Online marketing revenue jumped 27% year-on-year to 16.3 billion yuan. Non-marketing revenue, which includes cloud sales, increased 70% year-on-year to 4.2 billion yuan. Revenue from the iQiyi subsidiary rose 4% year-over-year to 8 billion yuan.
In further positive news, Baidu reported a net profit of 25.7 billion yuan, increasing sharply from 41 million yuan a year ago. Baidu finished Q1 with a cash balance of 172.9 billion yuan ($26.4 billion).
“We will continue to invest heavily in sales, R&D and operations to support the rapid growth of our AI-powered business,” said Baidu CFO Herman Yu.
Baidu’s Apollo Go self-driving taxi services continue to roll out to more markets and have recently begun charging fares in Cangzhou. The service is also available at Shougang Park, one of the sites that will host the Beijing 2022 Winter Olympic games. (See Baidu stock analysis on TipRanks)
For Q2, Baidu forecast revenue in the range of 29.7 billion yuan – 32.5 billion yuan. The guidance implies revenue growth of 14% – 25% year-over-year.
UBS analyst Jerry Liu reiterated a Buy rating on Baidu stock but lowered the price target to $340 from $370. Liu’s new price target still implies 80% upside.
Consensus among analysts on Wall Street is a Strong Buy based on 11 Buy ratings. The average analyst price target of $340.44 suggests 80.24% upside potential to current levels.
BIDU scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating the stock is likely to outperform the market.