Bullish: Analysts Just Made An Incredible Upgrade To Their PDD Holdings Inc. (NASDAQ:PDD) Forecasts

Celebrations may be in order for PDD Holdings Inc. (NASDAQ:PDD) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

Following the upgrade, the most recent consensus for PDD Holdings from its 39 analysts is for revenues of CN¥422b in 2024 which, if met, would be a huge 70% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 83% to CN¥79.05. Before this latest update, the analysts had been forecasting revenues of CN¥372b and earnings per share (EPS) of CN¥58.58 in 2024. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

View our latest analysis for PDD Holdings

Despite these upgrades, the analysts have not made any major changes to their price target of CN¥1,365, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic PDD Holdings analyst has a price target of CN¥1,791 per share, while the most pessimistic values it at CN¥1,047. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that PDD Holdings' rate of growth is expected to accelerate meaningfully, with the forecast 103% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 45% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that PDD Holdings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So PDD Holdings could be a good candidate for more research.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for PDD Holdings going out to 2026, and you can see them free on our platform here..

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.