Earnings Previews: Baidu, iQiyi, Palantir

Of a dozen firms that reported earnings before markets opened on Tuesday, eight beat estimates and four missed. That is a significantly higher percentage of misses than we have seen.

We already have posted our previews of four stocks reporting results after markets close Tuesday or before the opening bell on Wednesday: Coinbase, FuboTV, Unity Software and Berkeley Lights. We also have previewed five companies scheduled to report earnings after markets close Wednesday: Clover Health, eBay, Lordstown Motors, Nio and Opendoor.

Here’s a preview of three companies scheduled to release results first thing Thursday morning.

Baidu

Beijing-based Baidu Inc. (NASDAQ: BIDU) is China’s premier search engine. Its share price reached a 52-week peak in mid-February and has tumbled more than 50% since then. Depending on one’s point of view, this is either a fall that is going to continue or an opportunity to buy the dip. Baidu’s net cash total at the end of the first quarter exceeded its market cap. That seems like an opportunity.

One investor who chose to sell was Cathie Wood’s ARK Autonomous Technology & Robotics ETF. The fund has sold nearly 4.5 million shares in Baidu and currently owns about 473,000, valued at $78.8 million.

Of 36 brokerages covering the stock, 30 have a Buy or Strong Buy rating on the shares, and five more rate the stock a Hold. At a recent price of around $165.50, the stock’s upside potential based on a median price target of $307.65 is about 86%. At a high price target of $394.45, the upside potential is 138%.

Analysts expect Baidu to post second-quarter revenue of $4.78 billion, a sequential increase of 11.4% and a 30% jump year over year. Adjusted earnings per share (EPS) are forecast at $2.06, up 9.2% sequentially but down two cents year over year. For the full year, the consensus estimate calls for EPS of $9.37, down 4.3% year over year, and revenue of $19.72 billion, up 20%.

Shares trade at 18.4 times expected 2021 EPS, 15.3 times estimated 2022 earnings and 12.6 times estimated 2023 earnings. The stock’s 52-week range is $115.59 to $354.82. Baidu does not pay a dividend.

iQiyi

Another Beijing-based internet firm, iQiyi Inc. (NASDAQ: IQ), trades down more than 50% over the past 12 months. For the year to date, the stock is down 63%, including a plunge of 42% in late March as banks ensnared in the Archegos collapse dumped their shares in the internet content and gaming company that is a subsidiary of Baidu. Unfortunately for the company, a blizzard of announced new projects and partnerships has done nothing to stop the sliding stock price.

Analysts, however, have not given up on the company. Of 20 brokerages surveyed, nine have a Buy or Strong Buy rating and 10 rate the stock a Hold. At a price of around $10.75, the upside potential to the median price target of $17.83 is almost 66%. At the high target of $26.83, upside potential is nearly 150%.

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