Wall Street Analysts See Baidu Inc. (BIDU) as a Buy: Should You Invest?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Baidu Inc. (BIDU), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like Zacks Rank to make informed investment decisions [1][4]. Brokerage Recommendations - Baidu Inc. has an average brokerage recommendation (ABR) of 2.00, indicating a Buy, based on recommendations from 18 brokerage firms, with nine of these being Strong Buy, representing 50% of all recommendations [2][4]. - Despite the positive ABR, the article cautions against making investment decisions solely based on this metric due to the limited success of brokerage recommendations in predicting stock price increases [4][9]. Analyst Bias - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, often issuing five "Strong Buy" recommendations for every "Strong Sell" recommendation, which may mislead investors [5][9]. - The interests of brokerage firms are not always aligned with those of retail investors, leading to potentially misleading recommendations [6][9]. Zacks Rank Comparison - Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which have shown a strong correlation with near-term stock price movements [7][10]. - The Zacks Rank is distinct from ABR; while both use a 1-5 scale, ABR is based on brokerage recommendations and may not be up-to-date, whereas Zacks Rank reflects timely earnings estimate revisions [8][11]. Current Earnings Estimates - The Zacks Consensus Estimate for Baidu Inc. remains unchanged at $9.23 over the past month, indicating steady analyst views on the company's earnings prospects [12]. - The unchanged consensus estimate has resulted in a Zacks Rank 3 (Hold) for Baidu Inc., suggesting caution despite the Buy-equivalent ABR [13].