On the heels of the meeting with managements, Chan reiterates a Buy rating on shares of BIDU with a $188 price target, which represents just under a 3% increase from where the stock is currently trading. Additionally, the analyst reiterates a Buy on WB while boosting the price target from $43 to $60, which represents just a close to 20% increase from where the shares last closed.
Chan notes, “Tencent’s recently launched LBS ad on Weixin Moments allows proximity targeting and further lowers ad fee threshold. Industry checks suggest minimal cannibalization of Baidu’s ad budget from Tencent given different vertical focus while Weibo continues to show strong user engagement.”
From the analyst’s recent industry checks, Chan detects “minimal cannibalization” of BIDU’s ad budget, attributed to both platforms showcasing distinctive “vertical focus.”
Chan asserts, “We maintain our view of a mild sequential pick-up in Baidu’s core search in 4Q16 and a YoY growth recovery in 2Q17. Questmobile data shows improving time spent on Baidu mobile app since the launch of personalized news recommendation in May 2016.”
With perspective to Weibo, “As a unique KoL incubating platform, we believe Weibo remains a key beneficiary of the rising social fan-based marketing trend with KoL traffic showing a 57% higher conversion rate than e-Commerce C2C stores,” the analyst contends.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Karen Chan is ranked #605 out of 4,181 analysts. Chan has an 89% success rate and realizes 14.9% in her annual returns. When recommending BIDU, Chan earns 10.9% in average profits on the stock. When recommending WB, Chan garners 39.0% in average profits on the stock.