Mainland internet search leader Baidu may have unsettled investors yesterday after it forecast weak sales in the second quarter, but the company's full-year revenue growth is predicted to be strong.
The Beijing-based company saw its shares fall in after-hours trading in the US to US$125 from its close of US$135.83 on Nasdaq.
The firm expected to generate sales ranging from 5.33 billion yuan (US$847.2 million) to 5.46 billion yuan in the second quarter, representing a 56.2 per cent to 59.9 per cent year-on-year increase.
The US$857.1 million midpoint of that range was below the US$862.8 million forecast by analysts.
In a report yesterday, analysts at JP Morgan Securities (Asia-Pacific) said: 'While the second quarter was weaker than the Street's expectations due to near-term cautious sentiment on ad spending, we expect full-year revenue growth to be strong at 55 per cent.'
JP Morgan calculated revenue for Baidu this year to reach US$3.57 billion, up from US$2.26 billion last year. It rates the stock 'overweight', with a price target of US$200.
'We expect mobile search, mobile applications and other social advertising opportunities to provide additional benefit to Baidu in the long term,' the JP Morgan analysts said. 'Baidu's growth is far from slowing down, in our view.'
Market research firm Analysys International estimated that Baidu had 78.5 per cent of the mainland's internet search market in the first quarter. It was far ahead of Google, which had a 16.6 per cent share.
Baidu, which reported a 75.9 per cent gain in net profit in the first quarter, plans to pursue an aggressive investment strategy this year and sharpen its focus on operational efficiency.
'Although this is a seasonally slow quarter, our effective sales and marketing efforts enabled us to expand our SME (small and medium-sized company) customer base significantly,' said Baidu chairman and chief executive Robin Li Yanhong.
Baidu posted a net profit of 1.88 billion yuan from 1.07 billion yuan a year earlier on the back of a hefty addition of about 10,000 new online marketing customers.