Asahi Marusan Management reports Baidu stock poised to rise after stronger advertising returns

TOKYO, July 17, 2018 /PRNewswire/ - According to Asahi Marusan Management, the Chinese Internet search giant Baidu is set for an upturn in revenue with the recent boost to its news feed advertising.

Asahi Marusan Management on Monday increased its rating on shares of the Beijing-based company from sector weight to overweight. We predict that Baidu may just be on the brink of a year of growth with its improved ad sales and outlook in artificial intelligence.

"AMM's upgrade is based on a change in the outlook for Baidu Core business prospects in the near to midterm" Asahi Marusan Management Head of Corporate Trading Scott Elliot said in a note to clients. Elliot mentioned that in addition to the boost in ad revenue, Baidu's Phoenix Nest system – a new machine learning online marketing system – could help improve conversion rates and stimulate incremental revenue gains from search queries.

On its last update for investors on its earnings in April, Baidu had said that due to a crackdown by Chinese Internet regulators on low-brow content, several competitors where disrupted and the search firm's news feed received a surprising boost in the first quarter. 

This sudden upturn is coming 2 years after Baidu had its performance obstructed by censors after its marketing client base crumbled and its revenue growth was frozen by widespread review of advertising practices.

"According to checks from our field work, we see a stronger ramp in news feed ad revenue driven by higher user engagement with daily active users of 150 million as of June and 30 percent year over year growth of total time spent in the second quarter of 2018," Elliot added.

By his estimate, Baidu could quite possibly be posting daily revenues reaching ¥60 million ($9 million) by the end of this year, doubling last year's revenue. He increased the forecast for news feed revenue to ¥14.1 billion in 2018 and ¥22.6 billion in 2019, from the previous forecast of ¥12.0 billion and ¥19.6 billion, respectively.

About: Asahi Marusan Management is a private wealth management company that provides access to the global financial markets for both corporate and private clients.

SOURCE Asahi Marusan Management