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Citi Highlights Items To Watch For On Baidu's Q2 Earnings Call

Citi Highlights Items To Watch For On Baidu's Q2 Earnings Call - Baidu, Inc. NASDAQ:BIDU

Baidu Inc (ADR) (NASDAQ: BIDU) is set to announce second-quarter results on July 28, and Citi sees EPS lower than the Street's view.

Citi forecast Baidu's gross revenue to be (Rmb18.15 billion) $2.75 billion, flat to Street's estimate of Rmb18.17 billion. Baidu has guided for revenue of Rmb18.1 billion–18.2 billion.

Citi, which has a Neutral rating on the stock, projects second-quarter non-GAAP EPS of Rmb7.52 ($1.14) compared with consensus of Rmb8.08 ($1.21).

Related Link: Baidu Among Companies Working Together To Use Bitcoin Technology To Create Global Bank

"Our 2Q earnings have incorporated reported 1Q loss from Ctrip. While we expect Baidu to meet its revised revs guidance range, we believe the earnings variation will depend on whether there is any cutback of discretionary spending," analyst Alicia Yap wrote in a note.

On the call, analyst Yap will be focusing on:

  • "Update on medical revs and business tax impact"
  • "2H16 margins outlook"
  • "iQiyi privatization progress"
  • "Nuomi performance"

Q3 Expectations

Looking ahead to the third quarter, Yap predicts revenue of Rmb19.21 billion ($2.91 billion) and non-GAAP EPS of Rmb6.88 ($1.04) compared with consensus of Rmb19.79 billion ($2.96 billion) and Rmb8.89 ($1.33), respectively.

"While we believe consensus and our revs estimates have reflected the medical and inventory impact, we are not sure if there is any further impact from the latest noise related to those illegal gambling sites," Yap highlighted.

The analyst, who cut the price target by $1 to $179, trimmed 2016 and 2017 EPS estimates by 7.5 percent and 11.2 percent to Rmb28.08 and Rmb42.13, respectively.

The revised price target implies a potential return of 11.3 percent, while the stock is currently down 1.29 percent to $158.80 on the day.

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