Baidu, Inc. (BIDU) is trading lower today by $3.19 to $117.10 a share. The move lower comes as the stock continues seeing a relative drop in trading volume over the past five trading days as well as over the recent intraday action, suggesting some distribution is underway. Short term traders should watch the $116.67 and the $115.10 levels, the top of the bullish gap from Feb. 1st, for intraday supports. The risk/reward is definitely looking better for some potential snap-back upside off of the second level. However, if the bounce off of the $115 area will be relatively weak, and short-lived, it does open the door for a further decline into the wide support band that stretches all the way down into the $110.00 level.
Baidu, whose market share in China surged to 75.5% in the fourth quarter of 2010, is currently trading above its 50-day moving average of $109.88 and above its 200-day moving average of $93.46. Look for these parameters to climb/decline to confirm the company’s upward or downward momentum.
From a valuation perspective, BIDU shares trade at a 0.25x on a price to sales basis. The equity has a trailing P/E of 76.09, a forward P/E of 32.29 and a P/E to Growth ratio of 0.89. The median Wall Street price target on the stock is $140.00 with a high target of $158.00.
Ticker day’s range: $116.11 – $121.48.