UOB: Maintains Buy rating on BIDU-SW (09888) with a target price of 120 Hong Kong dollars.

UBS released a research report stating that they expect BIDU-SW(09888)s performance in the first quarter of 2025 to meet market expectations, with core revenue expected to remain approximately flat year-on-year. The bank slightly raised the growth rates for core cloud business revenue for the first quarter and full year of 2025 to 22% and 18.6%, respectively. UBS maintains a "buy" rating for Baidu, with a target price of $123 for US stocks and HK$120 for Hong Kong stocks (up from $115). The bank maintains its judgment that core advertising revenue will improve quarter by quarter and expects this business to return to positive growth in the second half of the year. The cloud business is benefiting from the rising demand for Model as a Service (MaaS), which is also driving cross-selling of traditional cloud infrastructure business, supporting strong revenue growth of 20% in the first quarter of 2025, with this momentum expected to continue throughout the year. Considering the potential for upgrades to its AI-driven search products and the strong momentum in its cloud business, the bank believes that Baidu's current valuation is attractive. The bank also points out that Baidu's autonomous driving business Apollo Go has made progress, with the expansion of fleets both domestically and internationally, increased penetration of Apollo RT6 models, and service expansion in high-margin regions. The bank expects the company's full-year profit margin to stabilize at 22.2%, mainly due to the recovery in advertising and the Robotaxi business.