PDD Holdings: Why It's A Buy Amid Resilient Demand And Adaptive Strategies

Benchmark analyst Fawne Jiang reiterated a Buy rating on PDD Holdings Inc. PDD, raising the price target to $125.
PDD reported first-quarter FY23 revenue growth of 58% year-on-year to $5.48 billion, beating the consensus of $4.53 billion. Non-GAAP earnings per ADS of $1.01 beat the consensus of $0.54
The analyst attributed the outperformance to the resilient demand for value products and the company’s strong value proposition as a value-for-money platform, and its adaptive executions to grow the consumer mindshare and wallet share.
Jiang applauded PDD’s execution in capturing robust growth while managing subsidies and promotions efficiently (S&M spending % dropped 395bps y/y and 133bps q/q despite ongoing international expansion).
The analyst notes that PDD is increasing its investment to optimize supply chain capabilities, including its recently launched RMB 10B Ecosystem Initiative, which offers resources and support to promote the quality growth of SMBs and quality sellers.
Based on the above, FY2023 and FY2024 non-GAAP EPADS estimates have been raised to $4.09 (prior: $3.41) and $4.71 (prior: $4.53), respectively.
Also Read: PDD Holdings Gets Price Target Hikes By Analysts Following Better-Than-Expected Q1 Results
Price Action: PDD shares traded lower by 5.32% at $67.62 on the last check Tuesday.

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