By Michael Elkins
Shares of XPeng (NYSE:XPEV) are up 0.86% in pre-market trading on Tuesday after HSBC Global Research reiterated a buy rating and cut their price target on the stock to $15.00 (From $34.00). The analysts cut 2022-24e net profit estimates mainly to reflect lower revenue estimates, lower gross margin estimates, and higher expense ratio estimates. Even though HSBC's earnings estimates are below Bloomberg consensus, they expect the company to narrow its loss and turn cash flow positive in 2024e, mainly on its new model launches and less Capex as production facilities/distribution network are largely in place.
The analysts wrote in a note, "We underestimated the volume contraction due to the intensified competition in mass market pricing range and the execution risks of new model G9 when moving upward the pricing range, which also translated into a lower-than-expected 3Q22 results. However, we think the market’s concerns have been largely priced in and both its US and H shares are now trading at historical troughs. We expect its 2023e sales volume growth to be back on track supported by its three new models at higher price point in 2023e and leading autonomous driving capabilities."