Chinese EV major, XPeng (NYSE: XPEV) gained at the time of writing on Monday after top-rated Bank of America analyst Ming-Hsun Lee upgraded the stock to a Buy from a Hold and raised the price target to $22, up from $16.30. The analyst’s raised price target implies an upside potential of 46.86% at current levels. The rating was given despite last week’s earnings miss by XPEV.
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Lee pointed out multiple positive factors working for the stock. This includes its partnership with Volkswagen (VWAGY), which would validate XPeng’s prowess in autonomous driving, as well as bolster its financial standing and supply-chain management. Other factors include a promising product mix and effective cost control that is likely to boost its Gross Profit Margin (GPM) in 2024-25. Moreover, the upcoming model lineup for the second half of this year to 2025 is likely to drive a rise in sales volumes.
The analyst added that even if XPeng’s sales volume this year is reduced, as expected, by 2% due to supply chain constraints, a rise of 4% is foreseen for both 2024 and 2025.
Analysts are cautiously optimistic about XPEV stock with a Moderate Buy consensus rating based on seven Buys, four Holds, and three Sells.
