Pinduoduo stock price target raised to $141 by BofA on strong Q2 results

Investing.com - BofA Securities raised its price target on Pinduoduo Inc. (NASDAQ:PDD) to $141.00 from $120.00 while maintaining a Neutral rating following the company’s better-than-expected second-quarter results. The e-commerce giant, currently valued at $168.87 billion, maintains an "EXCELLENT" financial health score according to InvestingPro data.

Pinduoduo reported revenue that met consensus estimates while adjusted net profit exceeded expectations by 46%. Marketing revenue grew 13% year-over-year, driven by an estimated 16% growth in gross merchandise value (GMV), despite reduced ad monetization at 4.32% compared to 4.42% last year. The company maintains impressive gross profit margins of 57.45% and trades at a P/E ratio of 13.6.

Transaction service revenue increased 1% year-over-year, with healthy growth from TEMU and Duoduo Grocery offsetting significant declines in China marketplace commissions as the company continued to offer fee reductions through its merchant support program.

Adjusted net profit reached RMB32.7 billion, substantially higher than the consensus estimate of RMB22.4 billion, primarily due to sequentially lower sales and marketing expenses and RMB10.4 billion in net interest income compared to RMB0.2 billion in the first quarter.

The stock initially reacted positively following the results but retreated from premarket highs after management tempered earnings outlook expectations for coming quarters during the earnings call. According to InvestingPro analysis, the stock appears overvalued at current levels, with additional insights available in the comprehensive Pro Research Report.

In other recent news, Pinduoduo Inc. reported better-than-expected second-quarter earnings, prompting several financial firms to raise their price targets for the company. HSBC increased its price target to $155, citing resilient transaction service revenue and lower-than-expected sales and marketing expenses. Macquarie raised its target to $165, noting strong adjusted net profit results, which exceeded market expectations due to reduced marketing expenses on the international platform Temu. Similarly, Barclays also set its price target at $165, attributing the increase to growth in Temu, despite a slowdown in the China business’s online marketing segment. Jefferies adjusted its target to $146, highlighting high-quality growth with revenue meeting expectations and non-GAAP operating profit surpassing forecasts. Lastly, US Tiger Securities raised its target to $120, attributing the performance to lower operating expenses rather than fundamental business strength. These developments reflect a positive outlook from analysts following Pinduoduo’s financial results.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.