XPEV - XPeng is on watch after JPMorgan warns shares will go in reverse

2023-07-21 08:19:37 ET

XPeng ( NYSE: XPEV ) dipped in early trading on Friday after JPMorgan downgraded the Chinese electric vehicle stock to an Underweight rating on the expectation that the stock would pull back ahead of earnings. The firm is also not confident XPeng ( XPEV ) will deliver satisfactory margin rates in the second half of the year or match the estimates from analysts for Q3 and Q3 deliveries.

"While we admit XPeng’s G6 pricing is attractive and expect the company to see volume ramp up in 3Q/4Q where we now project ~39k/53k units, our full-year volume estimate is now 133k units, still shy of mgmt’s earlier ambition of ~30% yoy growth to 150k units in 2023."

JPMorgan's main reservation on XPEV is that it expects "survival" competition in the auto market, which is anticipated to ultimately lead to a competition on the balance sheet and who has more cash to burn. Analyst Nick Lai and his team set a price target on XPEV of $10 via a blended average of 1.1X forward P/S and 0.9X EV/sales. The firm applied higher multiples as its operation performance and sales delivery are better than we previously anticipated.

Shares of XPeng ( XPEV ) fell 1.33% in early trading on Friday to $14.84. The EV stock is up more than 40% over the last six weeks.

More on XPeng:

• XPeng: EV Slowdown Is Taking A Toll (Rating Downgrade)
• More articles from Seeking Alpha analysts
• Electric vehicle jolts: Stocks that have scorched shorts this year vs. the short winners
• Growth metrics on XPeng
• Seeking Alpha's Quant Rating for XPeng

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