Credo Technology and PDD have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – June 18, 2025 – Zacks Equity Research shares Credo Technology Group CRDO as the Bull of the Day and PDD Holdings PDD as the Bear of the Day. In addition, Zacks Equity Research provides analysis on CAVA Group CAVA, Chipotle Mexican Grill CMG and Sweetgreen SG.

Here is a synopsis of all five stocks:

Bull of the Day:

Zacks Rank #1 (Strong Buy) stock Credo Technology Group focuses on building high-speed connections for the internet's 'backbone,' specifically specializing in data centers, AI systems, and cloud computing. In today's high-tech digital world, high-speed connections are paramount.

Whether someone is conducting a query through a large language model (LLM) like Gemini or ChatGpt, streaming a video, or using a cloud service, that data must travel efficiently and at lightning speed between different pieces of hardware. Credo's niche is in delivering the specialized components that enable this super-fast, reliable, and energy-efficient data transfer.

Credo Has Cash-Rich Clients

Credo's products, specifically their Active Electrical Cables (AECs) and Digital Signal Processors (DSPs) are integral for enabling power-hungry AI data centers operated by their clients.

Data Center Buildout Drives Credo's Revenue

Data centers are at the heart of Wall Street's fastest-growing industries, including cloud computing, AI, and Bitcoin mining. As big tech companies race for AI supremacy, they spend hundreds of billions of dollars in CAPEX on data centers. Wall Street analysts expect the data center market to more than double over the next five years. CRDO sells the "picks and shovels" to the AI gold rush, and as a result, Wall Street analysts expect robust triple-digit earnings growth.

Meanwhile, CRDO has shown a tendency to beat Zacks Consensus Estimates. Over the past four quarters, the company has delivered positive results that were 27% above expectations on average.

CRDO Exhibits Relative Strength

CRDO's price action matches its fundamental strength and is accelerating. Over the past year, shares have shown relative strength and gained a robust 171%, far outpacing the S&P 500's 9% gains over the same period.

CRDO shares are currently carving out a picture-perfect cup-with-handle pattern, which will trigger above $81.

Bottom Line

Credo Technology Group is strategically positioned to capitalize on the explosive growth in data centers, AI, and cloud computing. With its crucial high-speed connectivity solutions, cash-rich clients, and tendency to beat earnings expectations, CRDO presents a compelling investment opportunity.

Bear of the Day:

Zacks Rank #5 (Strong Sell) stock PDD Holdings, also known as Pinduoduo, is a multinational e-commerce company that operates in China and globally. PDD, which was based originally in Shanghai, enjoys it' largest market in China and operates under the Pinduoduo name. Meanwhile, PDD's US and international businesses operate under the 'Temu" umbrella. PDD has gained a foothold in several international markets by offering competitive and often cheaper prices than competitors such as JD.com, Alibabaand Amazon.

In its Chinese market, another key differentiator for PDD Holdings is that it offers a group buying model that allows customers to unlock lower prices by encouraging family and friends also to purchase items. The team purchase model does this through an interactive and social shopping experience.

In addition, PDD can often offer lower prices because it removes the middleman and connects users directly with agricultural producers, allowing the company to provide fresh, affordable produce. Beyond its e-commerce platform, PDD has vertically integrated its business with a vast network of sourcing, logistics, and fulfillment capabilities.

PDD Earnings Disappoint

Last quarter, PDD's net profit plunged nearly 50%, and the company fell short of Zacks Consensus Estimates by an ugly 37%.

PDD is suffering amid three major challenges, including:

· Tariff Turmoil: PDD was one of the most adversely impacted businesses in the tit-for-tat tariff war between the US and China.Though tensions have cooled between the world's two largest economies, the US still has a tariff on China of around 50%, likely making goods from the Temu website far more expensive for Americans.

· A Weak Chinese Economy: An ongoing housing crisis, rampant unemployment, and sluggish domestic consumption are all factors causing PDD's Chinese business to suffer.

· Intense Competition: The Chinese e-commerce market is highly competitive. Though PDD missed estimates, JD beat estimates in the recent quarter – an ominous sign.

PDD Profit Margins Sink

PDD is not only suffering from sluggish demand but also weak profit margins. In fact, quarterly margins have been cut in half since 2024.

PDD Price Action

PDD shares are stuck in a downtrend, exhibiting relative weakness, and are carving out a bear flag chart pattern.

Bottom Line

Though PDD Holdings has carved out an impressive niche in the global e-commerce landscape, the company faces significant headwinds, including, tariffs, a weak Chinese economy, and intense competition.

Additional content:

Will Macroeconomic Headwinds Derail CAVA's Traffic Gains?

CAVA Group has impressed investors with solid traffic growth, defying broader economic uncertainty. In first-quarter 2025, the company reported a robust 7.5% traffic increase, fueling same-restaurant sales growth of 10.8%.

The company's premium offerings, such as steak and pita chips, continue to see strong attachment rates across income levels, suggesting that customers still value the brand's Mediterranean-inspired menu, even amid financial strain. Additionally, CAVA's performance remained consistent across all geographies and dayparts, with no signs of regional weakness, including in the lunchtime segment where some peers have seen softness.

But now the question is, can this momentum withstand mounting macroeconomic pressures? According to management, there is little indication that consumers are pulling back. Across income levels, geographies and dayparts, traffic remains positive, with even low-income segments outperforming expectations. Premium add-ons like steak and pita chips are seeing strong uptake, reinforcing the brand's value proposition in a challenged consumer environment.

Still, CAVA is not ignoring economic uncertainty. The company maintained a full-year guidance, projecting 6-8% same-restaurant sales growth, moderating from the high of first-quarter 2025. Notably, CAVA has opted not to raise prices further despite inflation, aiming to preserve customer loyalty.

Efforts to offset cost pressures include productivity improvements through new labor models and a wider rollout of digital tools like the Kitchen Display System. These initiatives, combined with disciplined expansion and a resilient unit economic model, support sustained traffic even in a volatile environment.

While macro headwinds may persist, CAVA appears well-positioned to maintain traffic growth through strategic pricing, guest engagement and operational excellence, making it one of the few restaurant names that could remain insulated from broader economic softening.

How CAVA's Traffic Stacks Up Against CMG & SG

Chipotle Mexican Grill remains confident in its ability to maintain strong customer traffic, even in competitive environments. Looking ahead, management expects Chipotle's comps to remain positive through the end of the second quarter, with same-store sales in the mid to high single-digit range. While Chipotle's traffic is anticipated to be roughly flat by quarter-end, the brand's performance continues to outpace many peers in the fast-casual space.

Sweetgreen has experienced softer April sales, particularly in key urban markets like New York, Boston and Los Angeles, reflecting broader consumer caution. Despite this, Sweetgreen remains optimistic about regaining traffic momentum through innovation. Sweetgreen believes it has strong tools in place to boost guest frequency and stabilize traffic in the months to come.

CAVA's Price Performance, Valuation and Estimates

CAVA's shares have lost 36.4% in the past six months against the industry's rise of 0.6%.

Despite its recent decline, CAVA is priced at a premium relative to its industry, with a forward 12-month price-to-sales ratio of 6.57, which is above the industry average.

The Zacks Consensus Estimate for earnings per share has seen upward revisions. In the past 30 days, analysts have increased their estimates for the current year by 5.5% to 58 cents per share, indicating year-over-year growth of 38.1%.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Why Haven't You Looked at Zacks' Top Stocks?

Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.

Today you can access their live picks without cost or obligation.

See Stocks Free >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

https://www.zacks.com

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research