Long-Term Growth Prospects Justify Buy Rating for PDD Holdings Despite Short-Term Challenges

In a report released today, Saiyi He from CMB International Securities maintained a Buy rating on PDD Holdings (PDD – Research Report), with a price target of $134.50.

Saiyi He has given his Buy rating due to a combination of factors influencing PDD Holdings’ performance. Despite a short-term impact on earnings due to increased spending on sales and marketing to counter national subsidies from competitors, PDD is actively enhancing its platform ecosystem. This includes improving the quality and diversity of supply and bolstering user retention, which are expected to drive future growth.
While the company’s revenue and non-GAAP net profit fell short of consensus estimates, the strategic investments in merchant support and platform enhancements are anticipated to yield positive results in the long term. Saiyi He anticipates a turning point in earnings growth by the fourth quarter of 2025, as the initiatives reach their milestones. Consequently, even with a reduced target price, the long-term growth prospects justify maintaining a Buy rating for PDD Holdings.

In another report released today, Citi also maintained a Buy rating on the stock with a $152.00 price target.