"Noise vs. Catalyst": BofA Slashes Pop Mart Target Price By 25% Despite "Misunderstood" Crash

It has been a brutal few months for holders of Pop Mart. Since peaking in August 2025, the stock has cratered by 43%, significantly underperforming the Hang Seng Index. The narrative governing this sell-off has been dominated by fears over slowing US growth and an over-reliance on a single hit intellectual property: Labubu.

In a research note published on January 5, 2026, Bank of America Securities (BofA) attempts to catch the falling knife. While the analysts, led by Alice Ma, reiterate a "Buy" rating, they have been forced to capitulate to market reality, slashing their Price Objective (PO) by a massive 25%.

The report, titled "Noises vs. catalysts… lower PO but stay positive," offers a fascinating glimpse into the disconnect between high-frequency tracking data and corporate fundamentals, arguing that the market’s panic is largely based on "mis-perception."

The Labubu Hangover and Data Discrepancies

The core of the bear case against Pop Mart has centered on two issues: erratic US sales data and "IP concentration risk."

BofA argues that the market is relying on flawed third-party data tracking. Investors have been spooked by high-frequency US data points suggesting a slowdown. However, the bank counters that these trackers have a "limited sample base and tracking accuracy," failing to account for Pop Mart’s aggressive pivot toward Direct-to-Consumer (DTC) channels and offline stores.

"We see issues of limited sample base and tracking accuracy, given PPMT’s focus on DTC and its quick shift from 3rd-party eCom to offline and in-house eCom. As evidence, TikTok was 14% of US sales in 1H25... but high-frequency data still suggests a similar ratio in 2H25, which does not reconcile with its big channel diversification over the past few quarters."

Furthermore, the "Labubu" phenomenon—the jagged-toothed monster that conquered global pop culture—has become a double-edged sword. While Labubu contributed roughly 35% of revenue in the first half of 2025, fears that Pop Mart is a one-trick pony are overblown. BofA notes that the success of Labubu has effectively "masked" the strong growth of the company's other top-tier IPs.

Drawing a parallel to industry giant Sanrio, the analysts highlight that long-term sustainability often involves diversifying away from a primary hit:

"Compared to major global IP players such as Sanrio, which saw Hello Kitty sales ratio fall from 70% to 30% over past decade, PPMT has lower IP concentration risks and is on track to build a more diversified IP matrix in the long run."

Valuation Reality Check

Despite the defense of the business model, BofA acknowledges that sentiment has soured. The bank is maintaining its Earnings Per Share (EPS) forecast but is compressing the valuation multiple to align with the current gloomy sentiment.

"While we are positive on PPMT’s LT growth and moats, we cannot fully dismiss the ST impact from market debates on valuation, sentiment and flows. Hence, we maintain our EPS forecast but lower our PO by 25% to HK$300, as we now apply 20x 2026E P/E (from 30x)."

This new valuation peg of 20x P/E is in line with Pop Mart's average during its 2022-23 downcycle. For context, even at this lowered multiple, it trades at a discount to its closest peer, Sanrio, which traded at 23x during its own downcycle between 2014 and 2017.

Catalysts on the Horizon

Looking ahead to the rest of 2026, the bank suggests the sell-off may have created an entry point ahead of several key catalysts. The company is expected to post adjusted net income of RMB 13.06 billion (US$1.87 billion) for 2025, a staggering increase from previous years, with revenue projected to hit RMB 37.08 billion (US$5.30 billion).

The analysts point to the upcoming annual results in March and the potential launch of "Labubu 4.0" as trigger events that could force a repricing.

"After big corrections, we see plenty of catalysts from likely solid annual results in March, its track record of positive guide, potential launch of Labubu 4.0 and easy comps in 1H26. These catalysts could trigger a rebound ahead of its March results."

Furthermore, the appointment of Andrew Wu, President of LVMH Greater China, as a non-executive director signals a potential upscale shift. BofA sees "ample space for collaboration with global top consumer names" in 2026, hinting that Pop Mart’s evolution from toy maker to global entertainment platform is still in its early innings—provided investors can look past the current volatility.

Read More: What happened to Labubu — and why Pop Mart’s boom turned into a bust