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Shares of Baidu (NASDAQ:BIDU) faced selling pressure on Tuesday despite broad market gains. The Chinese search giant received a double blow from analysts at Goldman Sachs and Citigroup, which both delivered some bearish news. Shares were off 2.4 percent in late-afternoon trading.
According to Forbes, an analyst at Goldman Sachs reiterated a Neutral rating on the stock, but dropped the price target from $135 to $89, below the stock’s current trading price of about $92 per share. The analyst also cut earnings per share estimates by 22 percent for 2013, and 30 percent for 2014.
The reasons why the company’s targets were lowered are based on the same concerns that have plagued the company since it took center stage as China’s number-one search engine: mobile cannibalization, and competition. The analyst cites growing mobile use as a threat to Baidu’s revenues and currently high margins. Like Facebook (NASDAQ:FB), Baidu is spending a tremendous amount of money trying to figure out how to monetize mobile activity through advertising. With no clear solution in sight, it’s seems safer to bet on the bearish case…
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