Baidu (BIDU) reported earnings of $2.29 per share and revenue of $3.6 billion, which beat expectations of $2.05 per share and $3.4 billion. Analysts from Daiwa Capital and Wells Fargo upgraded the stock to outperform.
BIDU was up 5% on the news, jumping $16 from $221 to $237. However, we think the stock may face headwinds in the medium term. Using cycle analysis, the technical patterns suggest another drop, potentially below $210. Weakness in Asian markets, as well as a stronger Yen, may also be factors.
The market cycles on the chart below are designated by the black semicircles at the bottom of the chart.
BIDU Chart (Weekly Bars)
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