Last year was forgettable for Chinese internet giant Baidu (NASDAQ:BIDU). Baidu stock entered 2018 around $240. By May, the stock was making new, all-time highs above $280.

Then, the plunge started, triggered by the heating up of the trade war, the cooling of global growth, the stumbling of China’s economy, and less accomodative monetary policies.

BIDU stock ended 2018 at $160, down more than 30% for the year.

As forgettable as 2018 was for Baidu stock, 2019 could be quite memorable. BIDU is a deeply undervalued stock supported by the continuous growth drivers of the still-expanding Chinese digital economy.

Those drivers slowed in 2018, pulling Baidu’s revenue growth and margins lower. But if signs emerge in 2019 that economic activity is reaccelerating in China, then the company’s drivers will be reinvigorated, pushing up its revenue growth and margins and sparking a huge rally by BIDU.

Fortunately, it appears that this will be the case. Multiple data points suggest that the worst is over for China’s economy, and that it’s in the midst of a big turning point.

This turnaround will spark a big rally by Baidu stock. When that rally gets going, it will last a long time, as both fundamentals and analysts’ price targets indicate that the price of Baidu stock should rise well above $200.

Overall, it finally seems like a good time to buy BIDU stock on weakness.

China Looks Poised to Rebound

Although China’s headline data remains weak, as the country’s GDP growth reached its lowest level in nearly 30 years and its retail sales growth hit a 15-year low, there’s reason to believe that China’s economy has bottomed and is in the process of turning around.

All the negative data about China is backward-looking. GDP growth is a snapshot of economic activity over the past several months and quarters. Retail sales growth is a snapshot of consumer strength over the past month.

If you focus on forward-looking data instead, the outlook starts to change. Signs are emerging that China’s economy is in the process of reversing course. Consider the following four points:

• Trade talks between the U.S. and China are making progress.
• The U.S. dollar has significantly weakened against the Chinese yuan in 2019, after the dollar strengthened against China’s currency throughout all of 2018.
• The OECD’s composite leading indicator for China (CLI), , which “is designed to provide early signals of turning points in business cycles,” has increased month-over-month for two consecutive months (October and November). History shows that consecutive months of positive CLI growth after a multi-month streak of negative CLI growth is always indicative of China’s economy turning a corner.
• The OECD’s consumer confidence index for China has also increased month-over-month for two consecutive months (October and November).

Overall, leading indicators suggest that China’s economy is currently in the process of rebounding. If the country’s economy bounces back in 2019, and if the U.S. dollar continues to weaken against the Chinese yuan, then Baidu stock could be well-positioned for a huge rally.

Analysts See Huge Upside for BIDU

Across the board, analysts love BIDU stock and think it is worth far more than its current price tag.

According to third-party website TipRanks, the average price target on Baidu stock among 16 Wall Street analysts is $240, implying nearly 50% upside from current levels. The lowest price target among the analysts profiled by the site is $185, and that’s still 14% above the current level of BIDU stock.

Meanwhile, the algorithms over at Finbox.io put Baidu stock’s fair value at over $290. The folks at Morningstar agree, as they believe that the fair value of Baidu stock is over $320.

Overall, nearly everyone who covers BIDU thinks the stock is worth more than $200. Thus, once the rally gets going, Baidu stock should reach $200 and will probably exceed that level.

Fundamentals Support Upside

BIDU’s fundamentals also indicate that Baidu stock should trade above $200.

BIDU reported revenues of $12 billion last year. Its U.S. counterpart, Google (NASDAQ:GOOG), had a top line of $130 billion and is still growing at a 20%-plus pace. So it appears that Baidu’s revenue can still increase much more. That growth will come from increased demand for digital ads in China, more widespread adoption of the Internet of Things in the country, and bigger investments by Chinese businesses in the cloud and artificial intelligence.

As a result, Baidu’s revenue can easily grow at an annual rate of 20%-plus over the next several years.

Margins have been a headache for this company. But if China’s economy turns around and Baidu’s growth accelerates, the company’s margins will start to trend higher, too.

Thus, Baidu’s margins will increase, while its revenue will rise at a 20%-plus annual rate. Assuming 20% revenue growth and an operating margin of  25%, Baidu’s EPS could reasonably hit $16 by 2022. Based on a forward price-earnings multiple of 20, which is average for growth companies, and a 10% discount rate, that equates to a 2019 price target of over $260.

The Bottom Line on Baidu Stock

BIDU stock has been undervalued for a long time due to the persistent weakness of much of the Chinese economy. But signs are finally starting to emerge that the Chinese economy is in the process of reversing course. If China’s economy rebounds in 2019, that catalyst that will send Baidu stock flying to levels above $200.

As of this writing, Luke Lango was long BIDU, NKE, and GOOG.