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On Thursday, Jefferies analyst Thomas Chong adjusted the price target for Pinduoduo Inc. (NASDAQ:PDD) shares, bringing it down to $156 from the previous $171, while reaffirming a Buy rating for the company. According to InvestingPro data, analyst targets for PDD range from $101.94 to $193.06, with the company showing an EXCELLENT financial health score of 4.05 out of 5. Chong’s commentary focused on Pinduoduo’s fourth-quarter results, noting the management’s emphasis on a high-quality development strategy as a crucial factor for the company’s progress.
According to Chong, Pinduoduo is investing in its platform ecosystem, which includes a significant RMB10 billion fee reduction initiative. This investment is aimed at attracting high-quality merchants and providing logistics support, both of which are intended to benefit the merchants and encourage innovation. The strategy appears to be working, as the company has achieved impressive revenue growth of 87.39% over the last twelve months, while maintaining strong gross profit margins of 62.06%. He highlighted that these efforts are also advantageous for consumers, who enjoy promotions across various campaigns.
Chong mentioned that the high base effect on earnings in the first quarter is a factor that is already recognized by the market. He anticipates that the company’s earnings will return to a more normalized stage in the second half of the year. Despite the reduction in the price target, the analyst maintained a positive outlook on Pinduoduo’s stock by keeping a Buy rating.
Pinduoduo’s commitment to fostering a high-quality development strategy and supporting its merchants and consumers through investments and promotions is a testament to its efforts to maintain a robust ecosystem. As the company moves forward with its strategy, the market will be watching to see how these initiatives impact its financial performance in the coming quarters.
In other recent news, PDD Holdings Inc. reported its fourth-quarter 2024 earnings, showcasing a mixed financial performance. The company achieved a 24% year-over-year increase in total revenues, reaching RMB110.6 billion, which fell short of the anticipated RMB115.15 billion. Despite missing revenue forecasts, PDD Holdings exceeded earnings per share (EPS) expectations, reporting an EPS of RMB20.15 against the forecast of RMB19.84. The company’s non-GAAP net profit attributable to ordinary shareholders was RMB29.9 billion, surpassing both Citi’s and the consensus estimates. Citi analyst Alicia Yap maintained a Neutral rating on Pinduoduo, with a price target of $125, acknowledging the mixed results. PDD Holdings emphasized its commitment to long-term growth, focusing on ecosystem investment and high-quality product delivery. The company is also expanding its merchant support and logistics in remote regions, aiming for sustainable growth despite the challenging market conditions.
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