JPMorgan Goes 'Overweight' On Pop Mart, Dismissing Tariff Fears And Hype Cycle Concerns

In a classic contrarian call, J.P. Morgan has upgraded its rating on Chinese toy giant Pop Mart, urging clients to buy into what it calls an "improved risk/reward profile" following a sharp sell-off. In a note published on October 15, 2025, the bank moved from "Neutral" to "Overweight," bumping its price target to HK$320.

The call is noteworthy as it comes after the company’s shares plunged 24% from their recent peak, a period during which Hong Kong's Hang Seng Index actually gained 7%. For J.P. Morgan, this divergence signals that market pessimism has gone too far, creating a compelling entry point for a company whose fundamentals remain robust.

An 'Attractive' Entry Point After The Hype Cooled

J.P. Morgan’s primary argument is one of valuation disconnect. The bank posits that the recent share price collapse is more a reflection of deflated expectations than a deterioration in the company's performance. With staggering growth still on the horizon, the current price is a bargain.

The bank states:

"This suggests investors have been lowering expectations and building a more conservative stance, in our view. After our earnings revisions, we forecast Pop Mart’s sales/adj. earnings to grow 165%/276% yoy in 2025... Trading at 20x 2026 P/E (on JPMe), we think valuation looks attractive... vs other consumer names with lower quality and growth."

JPMorgan raised its earnings forecasts for 2025-27 by 5-7%, citing the unceasing momentum of its blockbuster IP, Labubu, and the emergence of new growth drivers. Upcoming catalysts, including Q3 results, holiday sales, and the release of a "Labubu & Friends" animation, are expected to reignite investor interest.

Beyond Labubu: The IP Machine Diversifies

For critics who viewed Pop Mart as a one-trick pony reliant on the Labubu craze, JPM offers a firm rebuttal. The report spotlights a new IP, "Twinkle Twinkle," as proof of the company's systematic ability to source and monetize new characters, effectively diversifying its revenue base. The new IP has already shown explosive demand, achieving sales of RMB 389 million (approximately US$54 million) in the first half of 2025.

J.P. Morgan's analysts observed:

"For the upcoming Halloween season, the 'Why So Serious' plush series was launched on Oct 9 on major online platforms, and sold out within a couple of minutes... Currently, the resale price on Qiandao App is at a 130% premium for Twinkle Twinkle, vs 290% for Labubu... We think this indicates that Twinkle Twinkle is attracting an authentic fan base (instead of being an alternative when consumers cannot get Labubu)."

The bank projects "Twinkle Twinkle" will account for 8% of total sales by 2027, putting it on par with established IPs like Skullpanda and Molly. This, JPM argues, is "further evidence of Pop Mart’s strong capability of sourcing and monetizing IP, as well as a diversification strategy to sustain long-term growth."

Shrugging Off Geopolitical Headwinds

Addressing the elephant in the room—a potential escalation of US tariffs on Chinese goods—J.P. Morgan remains decidedly unconcerned. With overseas operations projected to contribute over 60% of earnings by 2027 and the Americas being a key growth market, tariff risk is a material concern. However, the bank believes the financial impact would be "limited."

The report outlines Pop Mart's defensive strategy:

"In the near term, we believe Pop Mart has prepared inventory in the US for the shopping season in 4Q25 and reserves the privilege of directly hiking the retail price (we estimate a 15% hike would be sufficient to offset a 100% tariff...). To facilitate LT global expansion, Pop Mart has been planning a total of six manufacturing centers, including four in China and two in the rest of the world."

The company has already demonstrated its pricing power, successfully raising US retail prices by 12-27% in April 2025. This resilience, combined with a strategy to globalize its supply chain, provides a significant buffer against geopolitical friction.

In conclusion, while the market frets about cooling hype and trade wars, J.P. Morgan sees a well-oiled IP machine with proven global appeal and a clear path to monstrous growth. As the bank states in its long-term thesis, "We rate Pop Mart one of the best in the China consumer universe... in terms of management quality, execution capability, mission set-up and shareholder returns."