Baidu.com Hammered with Price-Target Cuts on Yanked Medical Ads

Tags: BIDU
20 Nov 10:38pm
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Chinese search-engine firm Baidu.com (BIDU: sentiment, chart, options) can't seem to avoid analyst scrutiny this week, for better or for worse. Word hit the Street on Tuesday that BIDU's website was hosting keyword advertising purchased by unlicensed medical and pharmaceutical companies. In response to criticism over the practice, the Internet heavyweight yanked the offensive ads -- and admitted that it's "currently uncertain about the near term financial impact of this prudent measure." This news seems to have sparked the recent flurry of brokerage moves, which have been decidedly mixed.

On Wednesday, Citigroup slashed the stock by 2 notches, from "buy" to "sell," while Credit Suisse issued a late-breaking note upgrading the equity from "underperform" to "neutral." Both firms cut their price targets on BIDU; Citigroup dropped its forecast from $300 to $110, and Credit Suisse trimmed its target from $184 to $138.

Today, RBC backed its "outperform" rating and lowered its price target from $387 to $242, while Goldman Sachs slashed its BIDU target from $260 to $225.

Traders appear to be focusing on the negative this morning, with BIDU down roughly 5% in the first 10 minutes of the session. Out of the gate, the shares found a new annual low of $105.55, marking its lowest price since April 2007.


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