On Monday, CFRA upgraded shares of XPeng (NYSE:) from Sell to Hold, maintaining a stock price target of $8.00. The firm cited expectations for XPeng’s revenue momentum to continue, bolstered by increasing demand for electric vehicles (EVs). The upgrade comes despite acknowledging the widening loss per share (LPS) for XPeng, which grew from -CNY10.67 in 2022 to -CNY11.92 in 2023.
The firm anticipates that the EV market’s growth will lead to heightened competition, especially as traditional brands are launching their EV offerings and established Chinese EV brands pose additional threats. According to CFRA, smaller players like XPeng may struggle to organically expand market share in this competitive landscape, particularly as industry peers are reducing prices to drive sales.
CFRA expressed caution regarding XPeng’s liquidity, given the significant investments the company is making in research and development. Despite these challenges, the firm revised its opinion to Hold from Sell based on the projection that XPeng’s net losses will narrow year-over-year in 2024.
The firm has kept its LPS estimates for XPeng unchanged for the upcoming years, with projections of -CNY7.96 for 2024 and -CNY5.25 for 2025. These figures reflect CFRA’s expectation that while competition in the EV sector intensifies, XPeng’s financial performance will gradually improve.
InvestingPro Insights
As CFRA adjusts its stance on XPeng (NYSE:XPEV) to a Hold rating with an $8.00 price target, real-time data from InvestingPro provides additional context to the company’s financial health and market position. XPeng’s market capitalization stands at $7.35 billion, indicating a significant presence in the electric vehicle industry.
Despite a challenging P/E ratio of -4.74, analysts have revised their earnings upwards for the upcoming period, suggesting potential optimism about the company’s future performance. Moreover, XPeng holds more cash than debt on its balance sheet, which could provide a cushion against the competitive pressures highlighted by CFRA.
InvestingPro Tips also reveal that XPeng is a prominent player in the Automobiles industry, but does not pay a dividend to shareholders, which may influence investment strategies. The company’s stock price has been volatile, trading near its 52-week low, reflecting the recent market sentiment. For those interested in deeper analysis, there are additional tips available on InvestingPro, and users can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 14 more InvestingPro Tips to explore, investors can gain a comprehensive understanding of XPeng’s position and prospects.
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