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On Thursday, Morgan Stanley (NYSE:MS) confirmed its positive stance on Pinduoduo Inc. (NASDAQ:PDD), maintaining an Overweight rating and a $150.00 price target on the company’s shares. The firm’s analyst cited adjustments to earnings estimates and the continued justification of the price target based on comparative non-GAAP P/E ratios. According to InvestingPro data, PDD currently trades at a P/E ratio of 10.24x and boasts an "Excellent" financial health score, supported by strong gross profit margins of 62.06%.Want to dive deeper? InvestingPro offers 13 additional investment tips and comprehensive analysis for PDD, helping investors make more informed decisions.
The analyst at Morgan Stanley, Eddy Wang, made slight modifications to the earnings forecasts for Pinduoduo, noting a 3% decrease for the year 2025. This change reflects the potential uncertainties arising from tariffs and subsidies within the electronics and home appliances sectors in the domestic market. Conversely, the analyst anticipates an improvement in the coming years, with a 1% and 3% increase in earnings estimates for 2026 and 2027, respectively. This expected growth is attributed to the performance of Temu, Pinduoduo’s overseas initiative, which is projected to enhance the company’s profit margins. The company has already demonstrated strong growth momentum, with revenue increasing by 87.39% over the last twelve months.
Despite these adjustments, the price target for Pinduoduo remains unchanged at $150.00. This target implies a 13 times multiple on the company’s estimated non-GAAP earnings per share for the year 2025. The rationale behind this valuation is drawn from a comparison with Alibaba (NYSE:BABA), which currently trades at a multiple of 13 to 14 times its estimated non-GAAP earnings per share for the same year.
Pinduoduo, a prominent e-commerce platform in China, has been navigating a complex market environment, balancing growth prospects with regulatory and economic challenges. The company’s ability to maintain its competitive edge and adapt to market conditions is critical for achieving the earnings potential identified by Morgan Stanley.
The Overweight rating suggests that Morgan Stanley’s analysts believe Pinduoduo’s stock could outperform the average total return of the stocks the analyst covers over the next 12 to 18 months. Investors and market watchers will continue to monitor Pinduoduo’s performance, particularly in light of the adjustments to earnings estimates and the potential for margin improvements in the years ahead.
In other recent news, Pinduoduo Inc. reported its fourth-quarter earnings for the fiscal year 2024, revealing a 24% year-over-year increase in total revenues to RMB 110.6 billion, which fell short of both Citi’s and consensus estimates. Despite this, Pinduoduo’s earnings per share (EPS) exceeded expectations, reaching 20.15 RMB compared to the forecast of 19.84 RMB. The company also reported a 17% year-over-year increase in non-GAAP net profit attributable to ordinary shareholders, surpassing Citi’s and the consensus forecasts.
Tiger Securities downgraded Pinduoduo’s stock from Buy to Hold, maintaining a price target of $130, citing the need for clearer signs of profitability stabilization and regulatory clarity. Jefferies analyst Thomas Chong adjusted the price target for Pinduoduo shares to $156 from $171, while reaffirming a Buy rating, highlighting the company’s high-quality development strategy. Citi analyst Alicia Yap maintained a Neutral rating with a steady price target of $125, noting that Pinduoduo’s gross profit margin was lower due to increased costs of goods sold and R&D expenses.
Pinduoduo continues to invest in its platform ecosystem, including a significant RMB 10 billion fee reduction initiative aimed at attracting high-quality merchants and providing logistics support. Despite competitive challenges and regulatory uncertainties, the company is committed to long-term growth and expanding its merchant support and logistics in remote regions.
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