After a $100 Move Up, Baidu.com Earnings Could Set Longer-Term Tone (BIDU)

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This evening we’ll get to see earnings Baidu.com, Inc. (NASDAQ: BIDU). The estimates for the Chinese online search engine leader from First Call are $0.60 EPS on $75.39 million in revenues.  Next quarter estimates are $0.91 EPS on $100.6 million in revenues. Estimates for fiscal Dec-2008 are $4.02 EPS on $433.6 million in revenues.

Analysts have an average price target north of $343.00, and Baidu.com’s 52-week trading range is $98.45 to $429.19.  Today’s $350-ish prices are above the street target, yet still well off of highs.

Baidu.com trades above both the key 50-day moving average of $268.90, and above the more important 200-day moving average of $285.18.  Shares are up more than $100.00 since mid-March, so it would be hard to believe that a "meet estimates and in-line guidance" isn’t going to cut it.

The more interesting aspect of today is what options traders are thinking.  Based upon a $350 pricing it appears that options traders are braced for a move of more than $22.00 in either direction.  While we do no make recommendations for options, you can see an example of how much volatility is in the stock.  Right now traders can "sell VOL" with a straddle sale and net in approximately $53.00.  We could see a large move based upon earnings and guidance today.

With a forward P/E of 87+ and its market cap of $roughly $12 Billion, its forward revenue multiple is still over 27-times forward revenues. 

Unfortunately, its conference call is set up for 8:00 PM EST.

Jon C. Ogg
April 24, 2008