Why PDD Holdings Stock Topped the Market on Tuesday

Chinese e-commerce stock PDD Holdings (NASDAQ: PDD) was a winner on Tuesday, rising to close the day 3% higher. That performance, inspired by an analyst's price target hike, was more than good enough to beat the 0.6% rise of the benchmark S&P 500 index.

A 21% raise

That morning, Freedom Capital Markets pundit Roman Lukianchikov pulled the switch on that price target move. He now feels PDD's American Depositary Shares (ADSes) are worth $170 apiece, well up from his previous estimation of $140. He maintained his buy recommendation on the company.

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According to reports, Lukianchikov wrote that PDD, perhaps best known for its lively Temu online shopping portal, is proving to be resilient in the face of recent challenges. These include the withdrawal of the de minimis exception for Chinese goods entering the U.S. and the American government's frequently erratic tariff regime.

That said, the analyst flagged several potential areas of concern for shareholders. Among these is the squeezed margins the company is currently posting, which, in his view, is a consequence of its long-term investment strategy.

Global ambitions

Another element Lukianchikov flagged as being significant is PDD's expansion into other markets besides the twin giants of China and the U.S. To me, this will be a somewhat under-the-radar development to watch as the trade spat between the two countries dominates the headlines.

PDD's performance in those smaller markets will be revealing, and indicative of management's ability to take advantage of different market conditions and consumer tastes.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.