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Can Growing Partnerships Drive Baidu's (BIDU) Q3 Earnings?

Baidu, Inc.BIDU is scheduled to report third-quarter 2018 results on Oct 30.

The company topped the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 40.14%.

In the last reported quarter, Baidu delivered a positive earnings surprise of 20.91%. Earnings of $3.18 per share grew 22.3% sequentially.

Also, revenues increased 32% year over year to RMB 26.0 billion ($3.93 billion). However, the figure missed the Zacks Consensus Estimate of $3.99 billion. Mobile revenues represented 77% of total net revenues compared with 72% in the year-ago period.

The company's shares have lost 21.2% on a year-to-date basis compared with the industry 's decline of 18.4%.

Product Portfolio & Partnerships to Drive Results

Baidu's continuous efforts to strengthen its mobile search engine and AI technologies are likely to drive top-line growth. Strong focus on leveraging the AI platform is aiding it to provide an improved user experience.

Last month, Baidu announced a collaboration with Intel at Baidu's 2018 ABC Summit in Shanghai. The tie-up is aimed at strengthening applications deployed on Baidu Cloud by leveraging Intel's AI capabilities. Intel's broad-based portfolio is focused on providing AI-driven solutions. It will enable applications deployed on Baidu Cloud with enhanced performance, scalability, storage and edge computing capabilities.

Per Grand View Research data, the AI market is expected to hit $35.9 billion by 2025 at a CAGR of 57.2% with 2017 as the base year. The projected figure takes into account direct revenue sources. Given the huge growth prospect of the industry, Baidu is putting its best foot forward to seize a major share of the projected revenue growth.

Hence, we believe Baidu's strong focus on product innovation and expansion is likely to favor third-quarter results.

What Our Model Says

Currently, Baidu has a Zacks Rank #3 (Hold) and an Earnings ESP of -0.16%, a combination that makes surprise prediction difficult. This is because per our proven model, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

We don't recommend Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement.

Baidu, Inc. Price and EPS Surprise

Baidu, Inc. Price and EPS Surprise | Baidu, Inc. Quote

Stocks to Consider

Here are some stocks that you may want to consider, as our model shows that these have the right combination of elements to deliver a positive earnings surprise in the upcoming releases.

AMETEK, Inc. AME has an Earnings ESP of +0.71% and carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

Expedia, Inc. EXPE has an Earnings ESP of +2.32% and a Zacks Rank #3.

Advanced Micro Devices, Inc. AMD has an Earnings ESP of +1.31% and holds a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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