Xpeng Inc – ADR (NYSE: XPEV) has surpassed all expectations on Wallstreet gaining 70% over the past month of trading. The company has outperformed its Chinese counterparts NIO and Li Auto with both companies gaining 41% and 64% over the same period. Xpeng’s unique technology and innovative EV performance has positively shifted investor sentiment. In early June, Citigroup analyst Jeff Chung upgraded the firms 12 month price target for Xpeng to $50.30, suggesting an upside of 14.3%. This article will breakdown everything you need to know about the Xpeng stock forecast.
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Analysts suggest bullish 2021 for Xpeng
Firstly, the companies listing has already attracted some larger institutions to provide analyst coverage. MarketBeat data shows an average price target across the board of 13 analysts at $51.28. Higher end targets such as Morgan Stanleys suggest the stock could reach $70 a share by the end of the year. These targets do shine the spotlight on the potential of Chinese EV manufacturer. The general consensus across the board of analysts suggest a Strong buy rating.
The smart money ratings from larger institutional analysts are as follows:
- Citigroup 6/2/2021 – Analyst Jeff Chung boosted the firms 12 month price target from $50 to $50.30. Citigroup maintained their bullish position on the stock with a Buy rating.
- Nomura Instinet 5/26/2021 -Analyst Martin Heung initiated coverage with a buy rating on Xpeng stock. The 12 month price target was set at $47 a share.
- Morgan Stanley 1/28/2021 – Analysts initiated coverage on Xpeng stock with an Overweight rating and a price target of $70 a share. This target remains the Streets highest target to date. Analysts at Morgan Stanley noted in January that “Xpeng can stand out with its full-stack software capability for in-vehicle and autonomous driving systems, and well poised to seize high-frequency transaction opportunities”.
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Financial review of Xpeng in 2021
Positive Q1 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 13,340 vehicles this quarter, an increase of 487.4% in comparison to the Q1 of 2020. Total quarterly revenues were recorded at US$450.4 million, representing an increase of 655.2% YOY. Another key positive from the Q1 earnings report was the increase in Vehicle margins which heavily impacts the bottom line. The vehicle margins increased to 10.1%for the first quarter of 2020, compared to a negative 5.3% in Q1 of 2020.
Key risks associated with the financials
The company ran a net loss for this quarter at US$120.1 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 (US$81.7 million for this quarter). The good news is as the vehicle margin continues to increase over time we will see the bottom line improve.
“The first quarter kicked off a great start to 2021 with a record-breaking vehicle deliveries notwithstanding seasonally slower demand for automobiles and the semiconductor shortage… Our strong momentum in the quarter was propelled by our industry-leading full-stack autonomous driving technology, solid differentiated product strategy and our vision to lead Smart EV development and transformation.”said Mr. He Xiaopeng, Chairman and CEO of XPeng
Revenue forecasts for Xpeng
Firstly, revenue forecasts can provide investors a greater understanding on the key growth indicators of a stock over the next year or two. Across the board of 7 Wallstreet analysts, Xpeng is expected to generate US$2.31 Billion in 2021. This forecast would represent a YOY growth of 154%. Looking further ahead, analysts forecast Xpeng to generate upwards of US$4.34 Billion by 2022. The above forecasts illustrate the lucrative potential the company holds as the EV market widens in China.
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 the financial year. 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, alongside many other EV companies will continue to run losses in the near future. Overall, Xpeng is positioned well to capture the growth we are seeing in the Chinese EV space.
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.
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