In "Major Banks," Bank of China: Baidu's fourth-quarter profit exceeds expectations, target price $172, recommends buying

The research report from Bank of China International indicates that Baidu (09988.HK) saw a 4% year-on-year decline in total revenue for the fourth quarter, but a 5% quarter-on-quarter increase, which is in line with market expectations. The revenue from its core A-enabled business was RMB 11.3 billion, accounting for 43% of Baidu's core business revenue. Although expenses exceeded expectations, adjusted operating profit and adjusted net profit were both 13% higher than market expectations, mainly due to better-than-expected gross profit contributions.

The firm expects Baidu to benefit from the global AI wave due to its firm execution of a strategy based on a full-stack end-to-end AI ecosystem capability. The firm believes that high-quality and sustainable AI-enabled revenue growth, along with enhanced organizational operational efficiency, will improve the company's financial health.

Considering the company's ongoing execution of a series of shareholder return plans, the firm maintains a "Buy" rating on Baidu (BIDU.US) with a latest target price of $172