Baidu Stock: Next Stop, $282?

Baidu (NASDAQ: BIDU) stock hit new two-year highs last week, and it's now trading within 5% of topping the all-time highs it hit in late 2014. China's dot-com darlings have been roaring back into the market's fancy, and Wall Street pros are going along for the ride.

China's undisputed king of search has earned some fresh analyst loving this week. Ken Sena at Wells Fargo initiated coverage of Baidu on Tuesday afternoon with a $290 price target and and outperform rating. On Wednesday morning, it was Chi Tsang at HSBC pushing out a bullish update. He's sticking to his buy rating, bumping his price target from $245 to $282.

Higher ground

When it comes to price targets, Sena at $290 and Tsang at $282 aren't setting high-water marks. Wendy Huang at Macquarie jacked up her price goal from $252 to $305 last month. However, successful investing isn't a race to perpetually higher price targets. Wait a minute. Strike that. That race to higher ground is exactly what successful investing is all about.

Sena's fresh bullish market call accompanies optimism about Baidu being able to leverage the success it's been having with neural networking computing trends across its core strengths in search, video, and maps. Tsang acknowledges the headway that Baidu is making in artificial intelligence (AI), but also plays up the growing popularity of its iQiyi video games and Baidu's overall lower marketing costs. Tsang feels that revenue at Baidu can soar 33% next year, well above the Wall Street consensus of 22% top-line growth in 2018.

Baidu has been pivoting away from some of the deficit-riddled growth initiatives it was pursuing in the past, but it doesn't mean that the online pioneer is going back to basics. Huang -- in propping the stock's price target to $305 last month -- also credited her bullish buoyancy on the long-term potential of Baidu's advantages in AI.

Baidu stock is rolling again. The stock has risen 44% higher so far in 2017 as of Tuesday close, and that was before moving higher on Wednesday following the bullish analyst update. It's not just market sentiment fueling the rise, as Baidu's fundamentals are also showing signs of life. The stock rallied following robust second-quarter results this summer with adjusted earnings nearly doubling. Analysts are pushing up their profit forecasts along with their price targets, and Baidu now trades at a reasonable 26 times next year's earnings target.

China's search giant seems to be hitting on all cylinders these days, and while that's the kind of consistently that has proven unsustainable for Baidu in the past, it's hard to bet against it when everyone's aiming even higher. Until we get to the finish line of this race, with analysts pushing their price targets higher, it's how the game of successful investing is won.

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Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Baidu. The Motley Fool has a disclosure policy.