• The shares of Baidu (NASDAQ: BIDU) have received a $125 price target from JPMorgan. These are the details.

The shares of Baidu (NASDAQ: BIDU) have received a $125 price target from JPMorgan. And JPMorgan analyst Alex Yao upgraded Baidu from an “Underweight” rating to a “Neutral” rating while increasing the price target from $90.

Yao adjusted the rating on the back of alleviation of sector overhangs like regulation risk and ADR delisting risk. 

“While a more benign exogenous environment supports a valuation re-rating, we recommend investors stay on the sidelines with Baidu being a late-cycle vertical due to ad operators’ late revenue recovery cycle after times of crisis, compared to e-commerce and local service operators. That said, we believe the COVID-19 will dampen the ads outlook and we expect Baidu’s 2Q22 ads revenue growth rate to further deteriorate compared to 1Q22, which suggests downside risks to current Bloomberg consensus estimates,” wrote Yao in a research note. “We also revise down our margin estimates for 2022E given operating deleverage on online advertising and likely moderate pace of cost optimization. On the flipside, we remain optimistic about the development of robotaxi as more cities approve commercialized robotaxi operations. However, we think the stock price is unlikely to benefit from robotaxi development in the near term due to low investor risk appetite and insignificant financial contribution in the near term.”

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