Chinese E-Commerce Giant Drops 35% In 2 Days, But Analysts See 92% Upside Potential

Author: Piero Cingari | August 27, 2024 04:56pm

Shares of PDD Holdings Inc. (NASDAQ:PDD) are presenting a significant upside opportunity, with analysts forecasting a potential 92% rise from its current levels. This comes after the Chinese retail-tech giant saw its stock tumble by over 35% in just two sessions following disappointing second-quarter results.

What Happened?

PDD, formerly known as Pinduoduo Inc., suffered a massive 29% decline on Monday, following the release of its second-quarter results, marking its worst single-day drop since its 2018 IPO.

The company's guidance for slower growth, driven by intensified domestic competition and international market uncertainties, has spooked investors.

However, management highlighted their strategy to focus on “high-quality growth,” which includes bolstering merchant support and enhancing supply chain efficiency.

Read also: What’s Going On With Temu Parent PDD Holdings’ Stock After Earnings?

Analyst Reactions

Following the disappointing second-quarter results from PDD Holdings, several analysts have revised their forecasts and price targets for the company. Here's a summary of the recent analyst actions:

• Benchmark lowered its price target on PDD Holdings from $210 to $185, maintaining a Buy rating. “We recognize the increased risk factors but believe that PDD's fundamentals are not broken,” they noted. Benchmark revised their price target to $185 to reflect updated estimates, while indicating that the stock is trading at less than 10 times their 12-month earnings estimate, offering compelling valuations.
• Goldman Sachs lowered its price target from $184 to $165 but maintained a Buy rating on PDD. Analyst Ronald Keung, indicated that the market is underestimating PDD's strengthened ecosystem and a clearer gross merchandise volume (GMV) growth outlook. He highlighted that the company's previous aggressive ad monetization tactics have been reined in, which could lead to more sustainable growth.
• Citigroup reduced its price target from $138 to $110 while keeping a Neutral rating. The bank cited weaker-than-expected earnings and heightened competition as factors for the downgrade.
• Nomura Instinet cut its price target from $116 to $105 but retained a Neutral rating. The analyst team pointed to the company’s subdued Q2 performance and concerns over future revenue growth as reasons for the revised target.
• Macquarie lowered its price target from $160 to $140 and reiterated its Outperform rating. Despite the cut, Macquarie remains bullish on the stock, believing the market is overreacting to short-term issues.
• Barclays dropped its price target from $98 to $84 while sticking with an Equal Weight rating. Barclays expressed concerns over the sustainability of PDD’s growth amid increasing competition in the domestic market.

Summary of Analyst Moves On PDD

Firm	Old Price Target	New Price Target	Rating
Benchmark	$210	$185	Buy
Citigroup	$138	$110	Neutral
Nomura Instinet	$116	$105	Neutral
Macquarie	$160	$140	Outperform
Barclays	$98	$84	Equal Weight

Top Nasdaq 100 Stocks With Over 30% Upside

Here’s a look at other Nasdaq 100 stocks that Wall Street analysts believe have significant upside potential:

Name	12-Month Median Analyst Price Target vs. Last Price
PDD Holdings Inc.	93.13%
Micron Technology, Inc. (NASDAQ:MU)	61.45%
Moderna, Inc. (NASDAQ:MRNA)	50.07%
Super Micro Computer, Inc. (NASDAQ:SMCI)	48.86%
Biogen Inc. (NASDAQ:BIIB)	37.75%
Dollar Tree, Inc. (NASDAQ:DLTR)	36.27%
DexCom, Inc. (NASDAQ:DCOM)	30.88%

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Posted In: BIIB DCOM DLTR MRNA MU PDD SMCI