Nomura moved PDD Holdings (NASDAQ:PDD) up to a Buy rating from Neutral on Friday, while leaving its price target unchanged at $136.0 - an implied gain of just over 35% from the stock’s close of $100.62 on Thursday.
The brokerage argued that the shares look undervalued, noting that the stock trades at what it called "merely" 8.6 times its 2026 forward price-to-earnings ratio. That valuation, Nomura said, makes PDD "too cheap to remain on the sidelines."
In its note, Nomura dissected PDD’s fourth quarter results and described a clear divergence within the company’s revenue mix. The Chinese e-commerce business appears to be decelerating, while the firm’s overseas segment has shown steady signs of recovery as transaction service revenues increased.
Central to the broker’s view is Temu, PDD’s international online marketplace, which Nomura said continued to post strong U.S. sales through 2025 despite higher import tariffs. The brokerage also flagged a recent U.S. Supreme Court decision that overturns a large portion of Washington’s tariffs as a potential positive for Temu’s U.S. competitiveness.
Nomura credited PDD’s management team for the execution underpinning the overseas resilience, saying the team had delivered in spite of a series of challenges, including tariff hikes and import policy changes in multiple overseas markets through 2025. The analysts wrote that the company’s international performance demonstrated strong operational durability.
Nomura additionally pointed to the New Pin Mu initiative from PDD and Temu, describing it as a constructive development that should help the marketplace better navigate increased scrutiny and regulatory pressures on Chinese-made products in western countries.
The brokerage noted that PDD shares have fallen roughly 20% over the past 12 months and that the stock has underperformed the HSI technology index during that period. On that basis, Nomura portrayed the current share price as offering an attractive risk-reward profile.
Separately, an AI-driven product mentioned in the original coverage evaluates PDD alongside thousands of other companies using more than 100 financial metrics. That product assesses fundamentals, momentum, and valuation to identify stocks that it views as offering favorable risk-reward characteristics. The original coverage cited past winners identified by the tool as examples of its record.
Context note: This article reports Nomura’s published rating change, target price, valuation metrics, and the brokerage’s commentary on PDD’s business trends and initiatives as described in its note.