Oppenheimer says the primary issue with
BIDU is that revenues are unpredictable;
and given slowing growth in 1Q and margins
under pressure from its Japan investments,
investors do not know how to model or
value the stock. With Olympics incrementally
benefiting display and higher local
advertising, they think '08 will be a
more difficult year for BIDU. While BIDU
shares are down 41% from its 52-week high,
they note the shares are trading at a 250%
premium to its peers. During 2007, we saw
the share trough at a 160% premium,
suggesting 36% downside on a relative basis.
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