Citi and Macquarie raised their price targets on the company’s U.S.-listed shares.
Retail investors and analysts grew more optimistic about PDD following the Chinese company’s quarterly results, and backed its strategic initiatives aimed at driving growth amid a challenging situation in the U.S. market.
PDD, which operates e-commerce platforms Pinduoduo in China and Temu internationally, reported a less-than-expected 3.9% decline in net profit for the second quarter. The company’s 7.1% revenue growth, however, narrowly missed analysts’ expectations.
PDD’s U.S.-listed shares rose nearly 1% on Monday to a five-month high; on Stocktwits, the retail sentiment went by multiple notches in the ‘extremely bullish’ zone.
Following the results, Citi raised its price target on the company shares to $168 from $154, and Macquarie raised it to $165 from $126. Both the research firms kept their buy recommendations.
Macquarie analysts said the results were better than feared, given the geopolitical challenges, and demonstrate the company’s cost efficiency and overall “flexibility.”
The U.S. has ended its de minimis policy, which allowed low-value goods from China and Hong Kong to enter the country without customs levies and checks, hindering the business of Temu and fellow Chinese site Shein in the U.S. market.
PDD has responded by refocusing its growth and merchant efforts in Europe and Brazil, which Citi believes will help offset weakness in the U.S. market.
Citi analysts also noted that implementing higher prices and logistics fees, as well as reducing sales and marketing spending by Temu, will enhance the profit profile of the company’s overseas business.
PDD stock is up 35.8% year-to-date.
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