PDD's business outlook is mixed despite better-than-expected 2Q earnings, Deutsche Bank analysts say.

The bank trims PDD's revenue forecasts by 2%-3% for 2025-2027, but revises earnings forecasts up by 2%-10% for the same period due to operating efficiency improvement.

Tailwinds for PDD include reduced competition, a breakthrough in emerging markets for its international arm Temu, and a more optimized platform ecosystem after recent investments, DB analyst Peter Milliken notes.

However, a lack of growth catalysts in the short term and other negative factors like potential regulatory tightening in China and a slowdown in active user growth may weigh on earnings.

DB lifts PDD's target price to $130.00 from $112.00 but retains a hold rating on the stock.