Baidu turns bullish on strong second-quarter outlook

On Thursday last week, the internet search engine Baidu (BIDU) reported a 24.3% rise in the fiscal 2016 first-quarter revenue. Following the results, the shares of Baidu gained 4.45% to close at $194.30 on Friday. Considering the impressive mobile revenue growth and strong second-quarter guidance, the shares are expected to gain further.

During the fiscal 2016 first-quarter, Baidu recorded revenue of $2.454 billion (15.82 billion Yuan), up 24.3% from $1.96 billion (12.72 billion Yuan) in the similar period last year. The analysts’ had estimated revenue of 15.86 billion Yuan.

For the first-quarter, the net income of Baidu was $308.10 million (1.987 billion Yuan) or $0.84 (5.40 Yuan) per share, down 18.9% from the corresponding period of 2015.

The earnings estimate of analysts’ was 1.91 billion Yuan.

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The non-GAAP net income for the fiscal 2016 first quarter was $365.8 million (2.359 billion Yuan) or $1.06 (6.80 Yuan), down 13.9% from the year-ago similar period. As far as mobile search is concerned, the company stated that the monthly active users (MAU) were 663 million in March, up 9% on a y-o- y basis. Likewise, the MAUs of mobile maps stood at 321 million in March. This reflects a 19% increase on a y-o- y basis. In the fiscal 2016 first quarter, the mobile revenue contributed 60% of the total revenues of Baidu. The contribution was 50% in the first quarter of 2015. In the first quarter, the gross merchandise value (GMV) of transaction services touched a new high of $2.5 billion (16 billion Yuan), representing a 268% increase on a y-o- y basis.

Baidu also announced that the wallet activated accounts hit a new milestone of 65 million in March, up 152% on a y-o- y basis. The company also stated that the recent funding of its food delivery business was based on an estimated enterprise value of $2.5 billion.

For the second quarter, the company anticipates a 21.3% to 24.2% increase (y-o- y basis) in revenue. This translates to revenue in the range of $3.119 billion (20.11 billion Yuan) to $3.192 billion (20.58 billion). Excluding Qunar (online travel company sold to Ctrip in October, 2015), the outlook reflects a 28.1% to 31.1% rise in revenue on a y-o- y basis. The analysts anticipate revenue of $3.1 billion for the second-quarter.

The chart of Baidu stock indicates that the resistance zone exists between 195 and 200. On the downside, support for the stock exists at 168 levels. The RSI indicator is pointing upwards and has a reading of over 50. Thus, we can expect the stock to break the resistance in the coming days.

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