Shares in Xpeng are set to extend their blistering rally of nearly 80% this year, according to analysts, as the Chinese electric-vehicle maker introduces newer models and moves toward profitability.
Xpeng’s shares in Hong Kong surged over 10% Thursday following upbeat earnings and stronger-than-expected revenue forecast for the second quarter.
Its shares soared as much as 10.2% to 85.5 Hong Kong dollars ($10.86), and were last trading 7% higher, taking year-to-date gains to 78%.
The company is a key player in China’s hypercompetitive EV market, but has struggled to turn a profit amid rising competition and sluggish domestic demand.
The Guangzhou-based carmaker’s first-quarter revenue more than doubled from a year earlier, driven by robust sales, according to its earnings released Wednesday.
Xpeng said it delivered 94,008 vehicles in the first three months this year, more than four times the sales volume a year earlier.
That improved top line helped narrow its net loss for the first quarter to 664 million yuan, compared to 1.37 billion yuan a year ago, and lifted its gross margin to 15.6% for the quarter from 12.9% a year earlier.
Analysts expect Xpeng to turn profitable in the fourth quarter this year, thanks to its strong sales momentum and pipeline of new models.
“We expect Xpeng to break even in 4Q25 and makes a turnaround from 1Q26,” analysts at UOB Kay Hian said in a note Thursday, expecting “a strong product cycle” to continue driving Xpeng’s sales.
The brokerage maintains a buy rating on the stock and pegs target price at 150 Hong Kong dollars — over 76% upside from its current price.
“When it comes to profitability, the company expects the gross margin to improve steadily in 2025, supported by higher premium model sales and further economies of scale,” UOB Kay Hian analysts said in the note.
Xpeng has launched several new products, including the mass-market brand MONA last August and a renewed flagship model X9, featuring advanced autonomous driving system in April.
The automaker said it aims to begin mass production of vehicles equipped with Level 3 autonomous driving features in China by year-end, a significant upgrade from the currently more common Level 2 systems.
For the second quarter, Xpeng said it anticipates a revenue of 17.5 billion yuan to 18.7 billion yuan, compared with consensus forecast of 17.2 billion yuan, according to data compiled by LSEG.
It expects to deliver up to 108,000 electric cars in the second quarter, more than double from a year earlier.
The launch and delivery of MONA M03 Max model and new versions of its G7 and P7 cars will likely be the next “key catalyst” for Xpeng, Joel Ying, head of China autos at Nomura said in a note, pegging the target price for the U.S.-listed stock at $30.
Xpeng’s U.S.-listed shares rose 13% to close at $22.25, powering a year-to-date rally of over 88%. Still, stock are well off its record of more than $72 apiece hit in November 2020, according to LSEG data.
Rival BYD has seen shares in Hong Kong surge over 74% so far this year, Li Auto more than 22%, while NIO has lost over 11%.
— CNBC’s Arjun Kharpal contributed to this story.
Source: CNBC