tiprankstipranks
This Catalyst Could Send XPeng Stock Higher, Says Analyst
Stock Analysis & Ideas

This Catalyst Could Send XPeng Stock Higher, Says Analyst

Many stocks have taken a sound thrashing in 2022’s volatile stock market and you can certainly add XPeng (XPEV) to the list of beaten-down names. The Chinese EV maker’s stock has endured a 52% selloff this year, and for Deutsche Bank’s Edison Yu, the extent of the downturn is now unjustified.

Given the company’s “robust order book, supply-chain resilience, and advanced consumer grade autonomous driving capability (XPILOT 3.5 with Lidar),” Yu thinks that once the Covid-19 situation in China normalizes, these elements will be “more clearly recognized” in the year’s latter half. Investors were already feeling on shaky ground with the market turning away from growth stocks, and the recent outbreak of Covid-19 in China has further depressed sentiment.

That said, XPeng’s order book remains “robust,” and EV adoption “continues to accelerate” in China with March representing a new high of nearly 30% penetration in the retail market. Yet, given the supply-chain disruptions, Yu recently lowered his near-term delivery estimates.

The largest negative impact is expected for April, with Yu previously expecting deliveries to decline month-over-month by 40% – to 9,000. However, based on more recent channel checks, Yu now sees “potential upside to +10k.”

The Shanghai lockdown appears to have hit XPeng’s production/logistics to a lesser degree than others, and likely given its large number of “alternative suppliers,” XPeng’s supply chain management also seems to be “more resilient than peers.”

As such, with the April monthly sales report expected Monday, Yu thinks it could act as a “major catalyst.” And on this basis, Yu has issued a Catalyst Call, telling investors to load up on shares prior to the report’s release.

“Alternative data may already be pointing to a stronger-than-expected April in the coming days so we could also envision the stock rallying this Friday ahead of the official report,” the analyst explained.

And if you are concerned around a possible XPEV let down, given his belief peer Li Auto (LI) is in for a “relatively soft April,” Yu recommends selling Li shares as a hedge.

Short-term ideas aside, Yu reiterated a Buy rating for XPEV stock along with a $55 price target. The implication for investors? Upside of a hefty 112%. (To watch Yu’s track record, click here)

The rest of the Street concurs. All but one of the recent 10 analyst reviews are positive, culminating in the stock’s Strong Buy consensus rating. While not quite as exuberant as Yu’s projection, the $45.16 average price target is still set to generate returns of ~88% in the year ahead. (See XPeng stock forecast on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles