Today's All-Time High for Baidu (Nasdaq: BIDU) Stock May Just Be the Start

Baidu Inc. (Nasdaq ADR: BIDU) stock reached an all-time high today (Friday) of $222.36 after the company reported earnings that topped analysts' estimates yesterday afternoon.

In the most recent quarter, China's search engine giant Baidu reported earnings per share (EPS) of $1.73, which outpaced consensus estimates of $1.40. Total revenue came in at $1.93 billion, which was an increase of 58.5% from the previous year. Operating profit grew 22.5% since last year, and was reported at $573.6 million.

Baidu is the largest Internet search provider in China, and is frequently referred to as the Google of China. The company has long dominated Chinese Internet search on personal computers, but has been making a strong push to bolster its presence on mobile devices.

By all accounts, the mobile efforts have paid off. For the first time, the company reported that revenue from mobile services accounted for 30% of the company's total revenue.
BIDU Stock
"We had a great quarter as we continued to build very strong mobile momentum," Chairman and Chief Executive Officer Robin Li said. "As the clear leader in mobile search, mobile map and app distribution, mobile revenue for the first time ever contributed to 30% of our total revenue."

The company has made large acquisitions in the mobile space in the last year including the $1.9 billion purchase of 91 Wireless Websoft Ltd., China's largest mobile-app store.

"In the second quarter, revenue remained on a solid growth trajectory, with mobile as an integral part of our business that is a clear driver of our topline," Baidu's Chief Financial Officer Jennifer Li said in a statement. "We will continue to invest in product and technology to deepen our market leadership and fulfill our long-term vision."

The company's outlook is optimistic too. In the third quarter, Baidu is expecting revenue in the $2.16 billion to $2.22 billion range - an increase of 50.9% to 55%.

While BIDU stock is trading at all-time highs today, the nature of the market it operates in could keep pushing this stock even higher...

The Long-Term Baidu (Nasdaq: BIDU) Stock Outlook

The Chinese Internet market is growing at an extremely rapid rate, and that's why Money Morning's Executive Editor Bill Patalon has been recommending companies in this market for years.

"The number of consumers and business folks connected to the Internet in China - whether you're talking about computers, tablets, or smartphones - is bigger than the entire U.S. population," Patalon said. "And the government there is actually pushing growth. Beijing has mandated that 1.2 million folks - 85% of its population - will have broadband connections (3G or 4G) by 2020."

The company's strong revenue growth, optimistic forward guidance, and dedication to the mobile market have numerous financial analysts bullish on BIDU stock's potential.

Analysts at Deutsche Bank AG (NYSE: DB) set a price target of $245 for BIDU stock, which would represent a 10% gain from today's highs. Pacific Crest analyst Cheng Cheng bumped his price target to $260 after the earnings report - a 17% jump from today's mark.

Additionally, analysts at Morgan Stanley (NYSE: MS) projected that the company will grow 30% to 40% in the next three years.

According to the most recent survey from Thomson/First Call, 10 analysts currently rate BIDU stock as a "Strong Buy," 14 as a "Buy," six as a "Hold," and just one as an "Underperform." No analysts from the survey rate BIDU as a "Sell."

Money Morning's Defense and Tech Specialist Michael Robinson has been bullish on BIDU stock for some time, and recommended the Google of China to investors back in February when shares were trading at $163. At the time, he cited the company's operating margin, ROE, huge net cash hoard, and low forward earnings as bullish figures.

Readers who bought in on Robinson's recommendation have banked gains of 36.4% in just five months.

BIDU stock pared some of its early gains this morning and was trading up 8% to $221.37 at 11 a.m. today.

If Baidu continues to push into the mobile market, and all indications are that it will, the company should continue to profit from the industry's growth. And that means BIDU stock should continue reaching new highs.

Are you a BIDU shareholder or do you plan on investing in the company following yesterday's report? Join the conversation on Twitter @moneymorning and @KyleAndersonMM using #Baidu.

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