That little bit of analyst approval does wonders to tilt the scales of opinion and get investors off the fence and buying shares. That’s not always how it works out, but it did today for Chinese e-commerce giant Pinduoduo (NASDAQ:PDD), who got a nearly 2% boost in the closing minutes of Friday’s trading session thanks to one of those analysts.
The word came out of UBS via analyst Kenneth Fong, who noted that there was a good chance Pinduoduo had an “overlooked” growth profile. Fong also suggested that the market was overreacting to the “…geopolitical risks…” posted by Pinduoduo’s Temu arm. Further, the market wasn’t considering closely enough the massive potential reach it had. Thus, Fong left his rating at a Buy and hiked his price target from $217 to $248.
Interest on the Skids
When I went looking for more information on Temu and Pinduoduo, I got one doozy of a confirmation. Typing “Temu” into the search bar returned a telling autofill option: “Temu is a ripoff.” While the first search result does say that it’s not, it’s clear there are enough former customers very concerned about product quality to at least suggest there are some issues there. So, Fong’s assessment may not be the best; the geopolitical risks may be overblown, but they’re there, and when you throw in product quality issues, that certainly doesn’t help.
However, some of this can be addressed, and with JPMorgan reporting that China’s e-commerce sector was up 12% in the March quarter, that does suggest someone’s happy with their purchases.
Is PDD a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on PDD stock based on 11 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 136.96% rally in its share price over the past year, the average PDD price target of $182.78 per share implies 25.22% upside potential.
