Baidu Impresses Analyst With Market Gain Potential; Also Picks JD.Com For Resilience Against Livestream Competition

Mizuho analyst James Lee expects 4Q22 to be soft for China's Internet, given the COVID impacts on business activity and consumer sentiment.
The analyst anticipates the headwind reflected across all internet segments, including e-commerce, advertising, and cloud computing.
The early checks from late December through the Chinese New Year holidays have been increasingly positive, evidenced by solid consumer discretionary spending.
With the upcoming National Congress in March, Lee continued to expect a focus on consumption support of strategic industries as China achieves herd immunity.
Lee maintained JD.Com, Inc JD and Baidu, Inc BIDU as top picks as he anticipated both companies to be market-share gainers from regulatory policies and a competitive environment.
Lee maintained a Buy on JD and raised the price target from $82 to $85.
Heading into FY23, Lee expects total revenue growth to resume double digits starting 2Q23, incrementally confident about additional margin expansion.
JD remains his top pick in China on its potential to gain share and resilience against livestream competition.
The analyst reiterated a Buy on Baidu and a $180 price target.
Heading into FY23, the analyst expects the advertising business to resume positive growth starting 2Q23 and cloud business growth to accelerate meaningfully in the second half.
Despite near-term uncertainty, the analyst liked BIDU long-term on its potential to gain cloud market share from public sectors and the potential upside from autonomous driving.
Price Action: BIDU shares traded higher by 11% at $158.48 on the last check Tuesday.

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