Xpeng Inc – ADR (NYSE: XPEV) has surpassed all expectations on Wallstreet after multiple upgrades from large institutions. The company has seen a 92% gain over the past month, outperforming its Chinese counterparts NIO and Li Auto. Xpengs unique technology and innovative EV performance has positively shifted investor sentiment. Yesterday afternoon, Citigroup analyst Jeff Chung upgraded the firms 12 month price target for Xpeng from $34.70 to $57.71. This article will breakdown everything you need to know about the latest analyst forecasts and outlook moving into 2021.
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Analysts suggest bullish 2021 for Xpeng
Firstly, the companies listing has already attracted some larger institutions to provide analyst coverage. From NASDAQ data shows an average price target across the board of 2 analysts at $35. Higher end targets suggest $57.71 a share and lower end targets at $21. These targets although not from “smart money” institutions, do shine the spotlight on the potential of Chinese EV manufacturer. The general consensus across the board of analysts suggest a Strong buy rating. However, relying upon one set of data does not do the correct due diligence when analysing a stock forecast.
What are “Smart money” analysts saying about Xpeng stock?
Institutional or “smart money” ratings and price targets provide investors a more conservative set of data to review. The institutional price targets are limited due to the short time the company has been listed, however these are worth noting when evaluating an investment. The smart money ratings from larger institutional analysts are as follows:
- Citigroup 11/16/2020 – Boosted 12 month price target from $34.70 to $57.71. This is currently the highest price target for Xpeng from Broker institutions. Investors rallied behind this price boost, seeing a 5% gain over the day period of trading.
- JP Morgan Chase & Co 11/09/2020 – Upgraded Xpeng rating from Positive to Overweight. The firm also increased their 12 month price target from $27 to $43 a share. The overweight rating from a large institution such as JP Morgan is very positive news for investors moving into 2021.
- UBS Group 9/25/2020 – Initiated a buy rating on Xpeng not long after its IPO on Wallstreet. The 12 month price target was set at $25 a share whilst the share price was sitting under $19 a share. The stock since surpassed $25 within a week of the coverage from UBS.
- Bank of America 9/21/2020 – Initiated a buy rating 3 weeks after the IPO of Xpeng. The initial buy rating had sent through a wave of confidence to new investors, marking the first buy rating for Xpeng.
Analyst Data supplied from MarketBeat
What is the financial outlook Xpeng
Positive Q3 earnings results
A common theme amongst NIO, Li Auto and Xpeng is the key focus on the deliveries of the manufactured vehicles. The company delivered 8,578 vehicles this quarter, an increase of 265.8% in comparison to the Q3 of 2019 and a 165% increase from last quarter this year. Total revenues were recorded at US$293.1 million for the third quarter of 2020, representing an increase of 236.9% from the second quarter of 2020. Another key positive from the Q3 earnings report was the increase in Vehicle margins which heavily impacts the bottom line. The vehicle margins increased by 3.2% for the third quarter of 2020, compared to a negative 5.6% for the previous quarter.
Key risks associated with the financials
The company ran a net loss for this quarter at US$169.2 million, which was an increase from the previous quarter. This also seemed to be a common trend amongst EV companies operating in China and the US. The net loss is not likely to improve anytime soon as the company will continue to expand its operations and incur its heavy R&D costing ($93 million for this quarter). The good news is as the vehicle margin continues to increase over time we will see the bottom line improve.
In our first quarter as a public company we achieved strong operating and financial results, highlighted by the rapid growth in deliveries of our P7 Smart EV. Our commitment to innovation through end-to-end in-house R&D and data-driven capabilities is the cornerstone of our business… Looking ahead, XPeng will continue to capitalize on its core strengths in technology, while heightening sales and marketing efforts, further enhancing manufacturing capability, and developing our global strategy.said Mr. He Xiaopeng, Chairman and CEO of XPeng
The key differentials Xpeng brings to the Chinese EV market
Xpeng has achieved some very promising milestones that should not be overlooked. The following are key developments from Xpeng which allow for a greater insight into the companies direction moving into 2021.
- P7 model NEDC range 706km, longest in China (the distance the car travelled on the single battery).
- G3 model, highest C-NCAP safety score and is in the top-three best-selling SUV in China.
- Autonomous driving capabilities – XPILOT 2.5 & 3.0
- 135 Xpeng branded Charging stations across 50 cities
- Guangzhou GET Investment Holdings to invest in new Smart EV manufacturing base which is expected to begin manufacturing in 2022.
I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, the general consensus amongst both analysts and institutions remains bullish as we close in on the end of 2020. In similar fashion to its Chinese rivals, Xpeng has continued to impress investors with its strong delivery growth and improving vehicle margin. However, the red flags in regards to the deepening net loss does suggest the company will have many more quarters in this position.
The longer term outlook as per the analyst data covered in this article does suggest long term growth (opinion not advice). However, the associated risk with EV companies is the speculative volatility. Timing and a strong understanding of the Chinese EV environment can impact how you valuate Xpeng.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.