tiprankstipranks
XPeng: Building up Momentum for 2H21
Stock Analysis & Ideas

XPeng: Building up Momentum for 2H21

Anyone following the stock market’s developments in 2021, will be aware of how the landscape has changed for electric vehicle (EV) stocks. In 2020, almost any tenuous connection to the space would guarantee a bountiful share haul. This year, however, is entirely different. Prime example: XPeng (XPEV). The Chinese EV maker’s stock is 31% into the red in 2021.

That said, Deutsche Bank’s Edison Yu thinks change is on the horizon.

“Following strong 1Q earnings, we expressed our belief that investor sentiment appeared to be bottoming out and XPeng was setting up for a large increase in vehicle deliveries in the 2H of the year, driven by the LFP battery roll-out, mid-cycle G3 refresh, and launch of P5 sedan,” the analyst said. “We remain confident that this is on track and XPILOT adoption could now potentially surprise to the upside, boosting gross margins and more importantly, demonstrating to investors that despite hyper-aggressive competition, XPeng is gaining meaningful traction among consumers.”

Yu’s confident take follows a meeting with some of XPeng’s top brass, in which the company said that despite the semiconductor shortage, its order book is “at the highest levels ever.”

Propping up the demand are the cheaper LFP battery chemistry variants accessible to both the G3 and P7 models. “Importantly,” Yu adds, “these lower entry variants are not cannibalizing existing NCM orders.”

Later in the year, XPeng will start delivering the P5 sedan, for which pre-orders are already over 10,000. The exact pricing and specs will be released early in the 3rd quarter and the rollout will begin in Q4, with entry level trims expected to begin in the range between 150k to 200k RMB.

Sales are also expected to get a boost from an expanded physical store footprint. By the end of the year, the company should have roughly 300 locations compared to just 178 at the end of Q1.

Lastly, the adoption of XPeng’s autonomous driving system XPILOT is also on the rise. Seeing out the first quarter, the take rate reached over 20% for “cumulative P7 sales,” with March notching 25% and April higher still.

“XPeng thinks adoption should increase as customers become more aware of XPILOT’s capabilities and roughly pegs the ceiling at ~50% considering half of buyers choose the premium P7 configuration,” Yu further noted.

All in all, Yu rates XPEV shares a Buy along with a $43 price target. If correct, the analyst’s objective could deliver one-year returns of 46%. (To watch Yu’s track record, click here)

All 7 of Yu’s colleagues who recently posted an XPeng review agree, rating the stock a Buy, too. Backing up the Strong Buy consensus rating is a $47.73 price target, suggesting one-year upside of ~62%. (See XPeng stock analysis 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