Citi has elevated its rating on PDD Holdings (PDD, Financial) from Neutral to Buy, while also raising the price target to $165 from the previous $127. This adjustment follows a more substantial and earlier-than-anticipated reduction in tariffs, which is seen as beneficial for Chinese cross-border sellers. This development is expected to positively impact Temu's sales in the United States, according to the analyst's note to investors.
Citi considers the remaining 30% tariff to be manageable for Chinese sellers, noting that part of the expense can be mitigated through strategic cost optimization. The upgrading decision reflects the view that the tariff-related concerns affecting PDD have been significantly alleviated.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 37 analysts, the average target price for PDD Holdings Inc (PDD, Financial) is $153.99 with a high estimate of $234.60 and a low estimate of $105.82. The average target implies an upside of 31.05% from the current price of $117.50. More detailed estimate data can be found on the PDD Holdings Inc (PDD) Forecast page.
Based on the consensus recommendation from 40 brokerage firms, PDD Holdings Inc's (PDD, Financial) average brokerage recommendation is currently 2.0, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for PDD Holdings Inc (PDD, Financial) in one year is $246.18, suggesting a upside of 109.51% from the current price of $117.5025. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the PDD Holdings Inc (PDD) Summary page.
PDD Key Business Developments
Release Date: March 20, 2025
- Q4 Revenue: RMB110.6 billion, up 24% year-on-year.
- Full Year 2024 Revenue: RMB393.8 billion, growing 59% year-on-year.
- Online Marketing Services Revenue (Q4): RMB57 billion, up 17% year-on-year.
- Transaction Services Revenue (Q4): RMB53.6 billion, up 33% year-on-year.
- Q4 Cost of Revenues: Increased 36% to RMB47.8 billion.
- Full Year Cost of Revenues: Increased 68% to RMB153.9 billion.
- Q4 Operating Expenses (GAAP): Increased 19% to RMB37.2 billion.
- Q4 Operating Profit (GAAP): RMB25.6 billion.
- Q4 Operating Profit (Non-GAAP): RMB28 billion.
- Full Year Non-GAAP Operating Profit: Increased to RMB118.3 billion.
- Q4 Net Income Attributable to Shareholders: RMB27.4 billion.
- Full Year Net Income Attributable to Shareholders: RMB112.4 billion.
- Q4 Basic Earnings per ADS: RMB19.76.
- Q4 Diluted Earnings per ADS: RMB18.53.
- Q4 Non-GAAP Net Income: RMB29.9 billion.
- Full Year Non-GAAP Net Income: RMB122.3 billion.
- Q4 Non-GAAP Diluted Earnings per ADS: RMB20.15.
- Q4 Net Cash Flow from Operating Activities: RMB29.5 billion.
- Full Year Net Cash Flow from Operating Activities: RMB121.9 billion.
- Cash, Cash Equivalents, and Short-term Investments: RMB331.6 billion as of December 31, 2024.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- PDD Holdings Inc (PDD, Financial) reported a 24% year-on-year increase in Q4 revenue, reaching RMB110.6 billion.
- The company implemented a RMB10 billion fee reduction program, benefiting over 10 million merchants by enhancing operational efficiency and reducing costs.
- Logistics support measures led to double-digit order volume growth in remote regions, extending free shipping to nearly 100 million consumers.
- PDD Holdings Inc (PDD) continues to invest in agricultural technology and supply chain innovation, supporting the agricultural industry and next-generation farmers.
- The company has established a Merchant Rights Protection Committee to improve communication and address merchant issues, enhancing the overall business environment.
Negative Points
- Revenue growth has moderated, with a 59% year-on-year increase for the full year 2024, indicating a slowdown compared to previous periods.
- Intensified competition and fast-changing external environments are impacting short-term financials.
- Increased investments in merchant support and platform ecosystem development have led to fluctuations in profitability.
- The company's global business faces challenges due to changes in macro conditions and policy, as well as fierce competition.
- Operating expenses have increased, with total non-GAAP operating expenses rising to RMB35.1 billion in Q4, up from RMB29.3 billion in Q4 2023.
