Benzinga - by Surbhi Jain, .
Baidu Inc. (NASDAQ:BIDU) stock is in free fall.
The Beijing-based company hit a 52-week low of $88.48 on Thursday. It’s down 38.12% in the past year and 25.43% year-to-date.
So, what's the buzz around this Chinese tech giant, and is there a silver lining amid the gloom?
Chart: Benzinga Pro
Technical Turmoil: The Bear is Roaring Baidu is not just dipping below its key moving averages; it’s plunging. Trading below its 5, 20, and 50-day EMAs (exponential moving averages), the outlook is grim.
Chart: Benzinga Pro
The stock is also trading below its key SMA (simple moving average) levels, with its price at around $88.81, and SMAs as follows:
- 8-Day SMA: $91.78
- 20-Day SMA: $95.37
- 50-Day SMA: $100.86
- 200-Day SMA: $110.43
Chart: Benzinga Pro
The MACD (moving average convergence/divergence) indicator at -3.70 implies bearishness amid trading sentiment. The Bollinger Bands have the stock trading in the lower band, reinforcing the bearishness.
However, the RSI (relative strength index) at 25.67 lies in the oversold territory. Stocks trading at oversold levels generally generate buy signals and indicate an undervalued condition.
Overall, Baidu is practically begging for mercy in the face of relentless selling pressure.
Undervalued or Just Undesirable? Despite the bloodbath, Baidu's valuation metrics suggest it might be a hidden gem. With a P/E Non-GAAP (TTM) of 7.74 versus the sector median of 12.23, Baidu looks undervalued by a staggering 36.76%. Forward P/E ratios show similar discounts (Baidu stock 8.16 vs. sector median at 12.31). But is this enough to lure investors back?
Analysts to the Rescue? Enter the analysts with a lifeline. Susquehanna, Benchmark, and Morgan Stanley all seem bullish on Baidu, with an average price target of $146.67.
That's an eye-popping 64.61% upside from today's prices. These ratings, dropped on May 24 and May 17, suggest the pros see a major rebound on the horizon.
The Big Question: Risk or Reward? Baidu is at a crossroads. The stock's technicals are a disaster, but its valuation and analyst optimism paint a different picture. For those willing to brave the current storm, Baidu stock offers a high-risk, high-reward scenario.
Will Baidu bounce back, or is it set for more pain? Investors must decide if they’re betting on a comeback kid or a continued slide.
Stay tuned, because Baidu's next moves could be game-changing.
Read Next: Wall Street Looks Set For Modestly Lower Start Ahead Of Key Data, Tech Stocks Muted In Premarket: Analyst Says ‘Bearish Sentiment Has Become Understandably Quiet’
Image: Shutterstock
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