Pinduoduo receives multiple analyst upgrades after earnings beat. Stock rises

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on  Aug 30, 2023
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  • Analysts led by Goldman, Benchmark, Bernstein, Barclays, and HSBC have raised PDD targets.
  • The raised targets reflect robust Q2 results that beat estimates.
  • PDD stock is expected to go higher amid a positive outlook in domestic and global markets.

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A number of analysts have upgraded Pinduoduo Inc. (NASDAQ:PDD) on the back of positive stock market news. The upgrade happened after a Q2 earnings beat on Tuesday that saw the stock close 15% higher. The stock maintained the gains in premarket, gaining 3% to trade above $96 before cooling off slightly.

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Analysts expect the positive momentum in Pinduoduo stock to continue. Goldman Sachs upgraded PDD from neutral to buy, targeting $129. This is a significant boost from the previous $99. Goldman said the upgrade reflects an upward reset of the take rate of Pinduoduo’s main platform.

Benchmark analysts raised the stock’s target from $125 to $140. The analysts cited an improving growth outlook. The positive view was also held at Bernstein, with the target increased from $105 to $120. Other analysts to upgrade the stock were Barclays and HSBC, with targets of $115 and $126, respectively.

Pinduoduo earnings beat, outlook promising

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PDD stock has been under pressure since touching a high of $106 on January 27. The stock touched a low of $59 on May 23 before embarking on recoveries. The Q2 results boost the stock, with the upgrades suggesting a further surge beyond the January highs.

In the quarter ended June 30, Pinduoduo posted a revenue of $7.21 billion or £5.7 billion. The revenue exceeded expectations of $5.95 billion or £4.7 billion. Adjusted earnings per share of $1.44 also exceeded $1 estimates. 

In the wake of strong earnings, Pinduoduo co-chief executive Jiazhen Zhao said, 

Over the recent quarter, we saw a positive shift in consumer sentiment, leading to a rise in demand across various product sectors.

Pinduoduo also attributed the increased sales to spending during the Chinese 618 shopping festival. Zhao said the company had invested billions of yuan in coupons during the promotional period.

Meanwhile, analysts at HSBC expect Pinduoduo’s domestic and international markets to sustain. Barclays analysts see PDD’s China business growing rapidly, with a positive trajectory in global market share.

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