Thursday, February 15, 2007 (BIDU) Gets Hammered

It's been an orderly but relentless pre market bleed. The bears have caught up with BIDU. The stock has fallen to as low as the $101 level. A 10% drop today seems reasonable given the company for the first time guided lower on the top line. They warned of FLAT revenue from Q4 to Q1 and on the conference call last night the CEO and CFO seemed to hint that this situation could continue into Q2. That's just bad for an internet high flyer trading at 60x forward earnings.

Analysts are downgrading...

BMUR downgrades to HOLD from BUY;
CITI downgrades to SELL from NEUTRAL with a target of $105.
UBS downgrades to REDUCE from NEUTRAL with a target of $99.

UBS noted that the Q4 upside was "due to lower expenses and the booking of tax income."

There isn't much rocket science to this chart. It shows a couple of interesting things: Breaks below 50 day moving average aren't generally long lasting, but they are generally sharp downward moves. Chart also shows the 200 day moving average is just above $93 and while never breached looks to be a target IMO within a few weeks given those analyst downgrades.

The company blamed "seasonality" for the revenue slowdown. I believe it... At BIDU "seasonality" is a synonym for ..... GOOGLE.

$100 wouldn't be a surprise today... wil it be the pin point this week?

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