Maxim Group LLC Analyst Echo He says Baidu Inc (ADR) (BIDU) is one of her top stock picks this year, in part because of the company exposure to mobile search. She says she expects to see revenue growth acceleration this year as compared to 2013.
“Baidu is the number one search engine in China, as Google (GOOG) is here. Baidu is the dominant choice for PC search, probably accounting for around 60% search traffic on PC,” He says. “It also has dominant mobile search traffic share. That dominant market position gives Baidu pricing power, so Baidu is able to claim premium pricing over competitors.”
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But, He says competition remains a risk for Baidu, primarily from Qihoo 360 Technology Co. Ltd. (QIHU), which she says is the second-largest search engine in China. As a result of competition, He says Baidu has to continually invest and spend to maintain its market dominance.
“Baidu’s increasing expenses may lower its margin, which will not likely be as good as it has been in previous years,” He says.
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