I knew things would get interesting once the BIDU underwriters initiated coverage. Goldman & Piper came with a body-blow and an uppercut for BIDU today by starting coverage on it with an underperform rating. That’s something you rarely hear from one of the underwriters of an IPO. BIDU is down about 18 points right now. Here’s what Briefing.com posted this morning:
BIDU Baidu.com started with an Underperform at Piper Jaffray and started with an Underperform at Goldman Sachs (113.59 )
Piper Jaffray initiates BIDU with an Underperform and $45 tgt. Firm thinks the co’s strong position and high leverage in its business model, combined with an early stage paid search mkt in China, make the co a very desirable investment for growth investors, one that deserves a solid premium to its peers. However, they believe the co’s current stock price has far exceeded even the most aggressive valuations and is distinctly “off the chart,”. Goldman Sachs initiates BIDU with an Underperform and a implied value of $27, saying they remain extremely positive on the market opportunity in China & BIDU’s commanding leadership position in search, but they think valuation remains the one downside to the story, as they are not able to justify current valuation even when evaluating more aggressive scenarios.
