Piper maintains buy rating

Piper Jaffray analysts Gene Munster and
Vivian Li preview Baidu's June quarter.
They maintain their Buy rating and $430
price target.

Their checks indicate that the June quarter
is tracking slightly above Street estimates
of $112 million in revenue and $0.97 in EPS.

The analysts said, "We expect Baidu to report
slight upside to the Street's estimate of $112m
in revenue, despite concerns over the China
earthquake in May. From our conversation with
4 Baidu advertisers and 2 ad agencies, we believe
Baidu's business remains robust given
1) consistent addition of new customers as
advertisers continue to adapt to paid search
marketing and 2) increased ARPU from bundled
sales of Baidu's display ad and search ad."

They also believe that there is a small negative
impact from the Chinese earthquake on the
company's business "as traffic and small and medium
advertisers in the earthquake area were both
affected." However, the expected impact is not
meaningful.

The street expects revenue of $135 million for
the Q308, up 21% sequentially while the analysts
current revenue estimate for 3Q08 implies
sequential growth of 19%. If Baidu beats the
street in Q208, the analysts highlighted that
sequential growth from June to September
will likely fall below 21%, as the percentage
growth would decline with higher Q2 revenue.

Finally, a decline in Baidu's growth rate is
not a caution signal, rather it is a sign of
the law of large numbers.