Baidu Pushes Ahead With Yi, But Investors Wary Over Chinese Markets

Dell finally launched the first smartphone powered by Yi, ^[1] Baidu’s (NASDAQ:BIDU) its very own mobile operating system. While Baidu certainly stands to gain in a 300 million strong mobile Internet user base, the company’s stock is being dragged down by macroeconomic factors, including the threat to Chinese exports due to the Eurozone crisis. ^[2]

See our full analysis for Baidu

Perceived Risk Aside, Baidu’s Fundamentals are Strong

While economic concerns are making U.S. investors wary of Chinese stocks, we expect Baidu’s impressive revenue growth in 2011 coupled with its mobile OS and search initiatives should keep its valuation in the $45-$50 billion range.

Additionally, the company should see further credibility amongst investors after it was removed from the U.S. “Notorious Markets” piracy list, ^[3] after having struck a license agreement with Universal Music Group in July 2011.

We have a revised price estimate of around $140 for Baidu’s stock, which is roughly 24% above the current market price.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Engadget: Dell Streak Pro D43 launched in China, where Yi shall find some Baidu love [↩]
2. Bloomberg: Baidu Drags U.S.-Traded Stocks Lower as Cnooc Declines: China Overnight [↩]
3. Bloomberg: Baidu Removed From U.S. “Notorious Markets” Piracy List After Music Pact [↩]