CFRA initiates XPeng (XPEV) at Sell; sees Chinese competition rising aggressively

CFRA Research initiated coverage of XPeng Inc. (XPEV) with a Sell rating and an $8.00 price target on the stock as analyst, Aaron Ho sees competition in China rising aggressively in the next 2-3 years.

Ho Expects XPeng’s revenue momentum to sustain, driven by rising demand for electric vehicles. However, more traditional brands like Toyota (NYSE: TM), Volkswagen, and Ford (NYSE: F) are rapidly rolling out their respective EV models, as well as threats from well-established Chinese EV brands such as Li Auto (NASDAQ: LI), BYD, and Geely.

Aaron Ho wrote in a note, "We expect relatively small players like XPeng to face difficulties in expanding market share organically after the pent-up demand tapers. This becomes additionally challenging as industry peers are cutting prices to boost sales volume. Hence, we are cautious about XPeng's liquidity, given the necessity for substantial investments in research and development despite the weakening profitability."

CFRA estimates losses per share of CNY3.60 for 2023 and CNY2.47 for 2024.

Shares of XPEV are up 4.43% in afternoon trading on Tuesday.

By Michael Elkins | [email protected]

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