Key insights
- Goldman Sachs lowered its price target for Pinduoduo (PDD) to $145 from $158, citing a Q1 earnings miss and reduced future profit estimates. Despite a Buy rating, the stock's performance and the analyst's revised outlook suggest potential headwinds. The company's investment in a new brand and Temu's growth are noted, but the downward revision in profit forecasts and the stock's year-to-date decline indicate a cautious near-term outlook for PDD, potentially impacting investor sentiment in related e-commerce or Chinese tech stocks.
Investing.com - Goldman Sachs lowered its price target on Pinduoduo Inc. (NASDAQ:PDD) to $145 from $158 while maintaining a Buy rating on the stock. The shares currently trade at $86.61, near their 52-week low of $83.61, with the stock down 24% year-to-date.
The firm cited first-quarter results that came in below expectations, with marketing services growth rising 2% year-over-year and earnings per share falling 17% year-over-year, mostly due to below-the-line items. Transaction service revenue growth accelerated 20% year-over-year, indicating Temu’s gross merchandise value growth acceleration, while group operating profit grew 16% year-over-year.
Goldman Sachs noted the company’s launch of its first-party brand "Xin Pin Mu" investment cycle for the next three years, targeting to rebuild a Pinduoduo. At a $138 billion market cap, the stock trades at a P/E ratio of 10.16. According to InvestingPro analysis, PDD appears undervalued at current levels and earns a "GREAT" financial health score. Investors can access detailed valuation insights through the comprehensive Pro Research Report, available for PDD and 1,400+ US stocks.
The firm adjusted its fiscal 2026-2028 revenue estimates down 2% to 5% and lowered adjusted net profit projections by 11% to 12%. Goldman Sachs now forecasts group adjusted net profit of 105 billion yuan for fiscal 2026 and 126 billion yuan for fiscal 2027, representing 0% and 20% year-over-year growth respectively.
The revised 12-month price target of $145 is based on a sum-of-the-parts valuation methodology.
In other recent news, Pinduoduo Inc. reported its first-quarter fiscal 2026 earnings, revealing a significant miss in both earnings per share and revenue compared to analyst forecasts. The company posted an EPS of 9.51 RMB, falling short of the expected 16.77 RMB, and reported revenue of 106.2 billion RMB, below the anticipated 109.82 billion RMB. Despite an 11% increase in revenue year-over-year, adjusted net profit fell 17%, and the quarter included a 2 billion RMB investment loss. Following these results, Macquarie downgraded Pinduoduo to Neutral from Outperform, citing challenges in achieving a near-term earnings recovery. Morgan Stanley maintained an Overweight rating but lowered its price target to $129, adjusting its earnings per share estimates downward for the coming years. US Tiger Securities also adjusted its price target to $100, maintaining a Hold rating due to mixed quarterly results. Meanwhile, Jefferies cut its price target to $121, maintaining a Buy rating, indicating a softer-than-expected performance. These developments highlight the cautious stance analysts are taking toward Pinduoduo amid its recent financial performance.
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