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China’s Pinduoduo To Join Nasdaq-100, Pushing Out NetApp

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support@smarteranalyst.com (Ben Mahaney)
·2 min read
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Nasdaq has announced that Pinduoduo, Inc. (PDD), will join the NASDAQ-100 Index and the NASDAQ-100 Equal Weighted Index before market open on Monday, August 24, 2020.

Pinduoduo, one of China’s largest e-commerce companies, will replace US hybrid cloud data services company NetApp, Inc. (NTAP) in both indexes.

NetApp, Inc. will be also be removed from the NASDAQ-100 Technology Sector Index before the market opens on Monday 24- with Pinduoduo added to the NASDAQ-100 Ex-Technology Index at the next quarterly rebalancing.

Shares in PDD have rallied an impressive 124% year-to-date, while NetApp is down 33%.

With shares now at such high levels, analysts have a cautiously optimistic Moderate Buy consensus on Pinduoduo with an average price target of $83- indicating that the stock can pull back 2% from current levels.

According to JP Morgan’s Alex Yao the company’s “strong” execution is creating a better long-term financial outlook. He has just raised his PDD rating from Sell to Hold while boosting his price target from $25 to $85.

Goldman Sachs’ Piyush Mubayi also praised PDD’s ‘unique value proposition’ to online shoppers in China as well as the acceleration of e-commerce during Covid-19- but believes shares now show ‘limited valuation attraction.’

Meanwhile the Street has a more bearish Hold consensus on NetApp with an average analyst price target of $48 (15% upside potential).

Oppenheimer’s George Iwanyc has a Hold rating on NTAP but says that he expects the company to continue to benefit from steady operational execution and a strategic focus on hybrid cloud, accelerating private cloud solutions, and building out its cloud data services.

He is also positive on its overall Data Fabric strategy and capital returns program.

However “These positives are balanced by dynamic competitive/secular trends and macro uncertainty, leading to our Perform rating with a positive bias” the analyst explained.

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