Baidu Inc. (BIDU) recently announced first quarter financial results that delivered some mixed signals. While revenue was in-line with a 6.5% increase to $2.45 billion, earnings per share increased to $1.00 per share – beating consensus estimates by 13 cents. Shares initially moved lower as investors questioned the company’s new focus on artificial intelligence as it moves to shed its non-search related businesses to narrow its scope.
That said, the company continues to post faster growth rates than comparable U.S. companies like Alphabet Inc. (GOOGL) at a modestly lower revenue multiple. The Chinese market may also have more growth opportunities than the U.S. market in terms of an addressable market for many online services that Baidu has targeted.
From a technical perspective, the stock is making a renewed run towards its reaction highs at around $188.00. A breakout from these levels could lead to a run-up to its September highs of around $198.00 – a 6.1% gain from its current levels.
However, the relative strength index (RSI) is pointing to overbought conditions at 65.55 while the moving average convergence-divergence (MACD) doesn’t show a definitive trend higher quite yet. A clean breakout on above-average volume could help provide the push needed, but traders may want to wait for some additional consolidation below trend line resistance before such a move occurs.
Charts courtesy of StockCharts.com. Author holds no position in stock(s) mentioned except through passively-managed index funds.
{loadposition user99}