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<Research>UBS Raises BIDU-SW TP to HKD120, Expects Steady Core Biz Progress in 1Q
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UBS released a report projecting that BIDU-SW (09888.HK) will deliver 1Q25 results in line with market expectations, with core revenue remaining flat YoY. For the core advertising business, UBS forecast a 5.7% YoY revenue subtraction in 1Q25, an improvement from the 6.6% drop in 4Q24, underpinned by a stabilizing macro environment and a lower base comparison. The broker also anticipated sequential quarterly improvements in core advertising revenue in the coming quarters, turning to positive growth in 2H25. On the cloud business, UBS was encouraged by growing demand for Model-as-a-Service (MaaS), including Baidu’s ERNIE foundation model and third-party models like DeepSeek, which is driving cross-selling of its traditional cloud infrastructure services. This was expected to sustain robust cloud revenue growth above 20% YoY in 1Q25, vs 16% in 2024, with momentum likely to persist throughout the year. UBS believed Baidu’s gradual monetization of AI in its search business offers potential for further recovery in core advertising revenue. Additionally, progress in Baidu’s autonomous ride-hailing service, Apollo Go, was envisioned to narrow losses. UBS raised its target price for BIDU-SW (09888.HK) from HKD119 to HKD120 and for Baidu’s U.S. shares (BIDU.US) from USD115 to USD123. AAStocks Financial News |
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