BofA Cuts PDD Holdings (PDD) Target to $120, Maintains Hold

On May 28, PDD Holdings (NASDAQ:PDD) reported weaker quarterly results, prompting Bank of America Securities analyst Joyce Ju to lower her price target to $120 from $140 and reiterate a “Hold” rating on the shares.

Ju was disappointed with a slowdown in transaction revenue growth in Q1 2025, as well as a decline in adjusted net profits. The company stated that it had made substantial investments in its platform ecosystem, which negatively impacted its short-term profitability.

A close-up of a customer using the company’s e-commerce platform whilst shopping online.

The company’s adjusted operating profit decreased by 36% year-over-year, while its net profit declined by 45%. The contributing reasons for this weaker performance included a cut in merchant fees, lower benefits from trade-in subsidies, and the impact of trade policies on the U.S., its largest market.

The analyst noted that the earnings from the domestic marketplace declined despite solid growth. Adding to its challenges, the Temu online marketplace business also continued to report losses.

Ju believes the situation should improve in the coming quarters as some of these trends begin to reverse. However, she expects earnings for the next few years to remain pressured by the recent investments and changes to its various programs. As a result, she maintained his cautious stance.

PDD Holdings is a multinational commerce group that owns and operates a portfolio of digital marketplaces businesses, including Pinduoduo and Temu.

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Disclosure: None.