China Stock Eyes Worst Day in Years After Earnings

BIDU stock is trading at three-year lows

by Lillian Currens

Published on May 17, 2019 at 9:51 AM

China-based search engine Baidu Inc (NASDAQ:BIDU) stock is plummeting in early trading, after the company announced its first quarterly loss since at least 2005, and issued lackluster sales guidance ahead of a "more challenging market environment." As such, BIDU stock is 14.1% lower at $132.10, in response, trading at new three-year lows. 

BIDU has now lost more than 50% in the past year. An April rebound attempt was rejected at its 160-day moving average, and the shares are now trading south of recent support in the $150-$155 region. Today, the security is eyeing its worst day since July 2015. 

Analysts have been quick to respond. So far, Deutsche Bank downgraded the stock to "hold" from "buy," and nearly halved its price target to $147 from $298. Mizuho also cut its price target on BIDU, to $195 from $205. Benchmark, however, lifted its price target to $245 from $180. Prior to today, the brokerage bunch was split, with five "strong buy" ratings and five "holds." Now, the consensus 12-month target price of $208.13 is at a whopping 60% premium to current levels. 

While short sellers were piling on ahead of earnings, with short interest up 16.8% in the last two reporting periods, there's still room for more of these bearish bets. The 6.99 million BIDU shares sold short represent less than 3% of the stock's available float. Today, however, the equity is on the short-sale restricted list.

 

 


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