百度：Expecting steady cloud revenue growth-20250415

Investment Rating - The report assigns a "BUY" rating for Baidu, indicating a potential return of over 15% over the next 12 months [15]. Core Insights - Baidu's core business revenue is expected to reach RMB 24.0 billion in 1Q25E, reflecting a 1% year-over-year increase, driven by strong demand for AI-related cloud services [1][7]. - The anticipated non-GAAP operating profit for Baidu Core is RMB 4.5 billion in 1Q25E, which is 1% better than consensus estimates [1]. - The report highlights a proactive business transformation at Baidu, focusing on integrating more Gen-AI related search results to enhance user experience [1]. - The monetization of Gen-AI related search results is expected to begin in late 2Q25, which should support a recovery in advertising revenue growth and operating margins [1][7]. Financial Summary - For FY25E, total revenue is projected at RMB 137.6 billion, with a year-over-year growth of 3.4% [2]. - Adjusted net profit for FY25E is estimated at RMB 26.9 billion, showing a slight decline of 0.2% year-over-year [2]. - The report provides a detailed breakdown of revenue forecasts, indicating a slight downward revision of 0.8% for 2025E compared to previous estimates [8]. Target Price and Valuation - The target price for Baidu is set at US$146.7, down from the previous target of US$149.2, reflecting a 72.1% upside from the current price of US$85.24 [3][9]. - The valuation is based on a sum-of-the-parts (SOTP) analysis, with key components including US$51.8 for Baidu Core, US$37.6 for Baidu Cloud, and US$57.1 for net cash and other investments [9][10].