UBS downgraded Xpeng (NYSE: XPEV ) to a Neutral rating (From Buy) and raised their 12-month price target on the stock to $23.00 (From $12.00) after the carmaker announced a collaboration with Volkswagen (ETR: VOWG_p ).
“While we share the market's positive view on VW's investment and collaboration, and pricing competitiveness of G6's specs, we believe near-term upside catalysts have been priced in.” wrote analysts.
They believe that XPeng's 4.99% equity investment and technological partnership with VW serves as a testament to XPeng's prowess in vehicle intelligence and autonomous driving. Nonetheless, creating the two medium-size electric vehicles for VW, built upon G9's platform, will demand a minimum of three years to execute.
“While the VW collaboration will proceed over the next three years, the company remains vulnerable in a fiercely competitive market and needs to recover its profitability,” added analysts.
Due to the volume declines experienced in the first half of 2023 (H123) and the challenging mass-market competition encountered by older models, UBS decided to revise down their volume estimates for 2023 and 2024 by 26% and 14%, respectively. Consequently, UBS has also adjusted their projected topline figures for the same period, lowering them by 30% and 19%, and their net income estimates by 32% and 60% for 2023 and 2024, respectively.
Shares of XPEV are down 2.95% in pre-market trading on Monday.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.