Citigroup analysts have revised their projections for Baidu's (BIDU, Financial) third-quarter performance, anticipating lower-than-expected revenue. The firm's core advertising revenue is now expected to decline by 4.1% year-over-year, compared to the previous estimate of a 3.5% drop.
The analysts also foresee potential pressure on Baidu's profit margins for the same period, resulting in a 13% reduction in their forecast for the company's adjusted core operating profit. The revision is attributed to weak advertising income and unmonetized AI search capabilities.
While Citigroup maintains its buy rating for Baidu, it has adjusted the target price for the company's American Depositary Receipt (ADR) from $144 to $143. Despite an expected improvement in advertising spending enthusiasm in the fourth quarter, Baidu's core advertising revenue is projected to remain under pressure as growth from new products requires time to materialize.
