Daiwa upgraded Baidu's rating to "Buy" with a target price raised to 158 yuan

Daiwa published a report stating that the rating for Baidu (09888.HK) has been upgraded from "Outperform" to a strategic "Buy," with the target price raised from HKD 92 to HKD 158. The firm believes there are two recent catalysts, including the "Baidu World 2025" annual event on November 13 and the financial disclosure of improved performance in new businesses in the third quarter earnings report at the end of November.

The firm indicated that while Baidu's marketing business may lead to a significant revision of profit performance in 2026, it believes in Baidu's prospects of transforming from an online marketing company to a technology company, and that limited investor holdings in the company may drive the stock price further up.

Due to a decrease in advertising revenue, the firm has lowered its earnings per share forecasts for 2025 to 2027 by 14-30%. The firm noted that the growth prospects for Baidu's core marketing business may still be challenging. As AI-driven search queries have not yet been monetized, it has downgraded Baidu's core search revenue forecasts. At the same time, it has significantly reduced Baidu's core profit forecasts for 2026 to 2027, considering that profits in the third to fourth quarters are expected to be between RMB 2 billion to 3 billion, lower than the market forecast of RMB 3 billion to 5 billion