Baidu Inc. (NASDAQ:BIDU) on Tuesday reported downbeat results for the second quarter.

Baidu reported revenue of 31.3 billion yuan ($4.62 billion), down 4% year over year and missing the $4.65 billion analyst estimate.

GAAP diluted earnings were 5.74 yuan (85 cents) per American depositary share. Adjusted earnings of 7.22 yuan ($1.06) per ADS missed the $1.35 analyst estimate.

General Business revenue fell 4% to 25.2 billion yuan. Its operating margin was 12%, while its adjusted operating margin was 15%. Meanwhile, iQIYI revenue declined 5% to 6.3 billion yuan. The business posted a negative 2% operating margin and a roughly flat adjusted operating margin.

“The quarter was marked by several highlights. First, revenue from Baidu Core AI-powered Business reached RMB 12.5 billion and continued to account for half of Baidu General Business revenue. Second, operating cash flow for Baidu remained positive for the fourth consecutive quarter, reaching RMB 3.4 billion in the second quarter. Third, we are moving forward with our conversion to a dual-primary listing in Hong Kong and expect it to become effective within this year.” said Haijian He, CFO of Baidu. “Going forward, we remain firmly committed to investing in AI as the core driver of Baidu’s long-term growth.”

Baidu shares rose 1.5% to trade at $92.26 on Wednesday.

These analysts made changes to their price targets on Baidu following earnings announcement.

  • Morgan Stanley analyst Gary Yu downgraded the stock from Equal-Weight to Underweight and lowered the price target from $130 to $80.
  • Barclays analyst Jiong Shao maintained the stock with an Equal-Weight rating and cut the price target from $124 to $96.
  • Benchmark analyst Fawne Jiang maintained the stock with a Buy and lowered the price target from $215 to $150.

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