JPMorgan issues short-term buy call on China electric car stock

JPMorgan sees some near-term calatlysts leading to a big rally in Xpeng shares. Analyst Nick Lai, who has an overweight rating on the Chinese electric vehicle maker, added Xpeng to the Wall Street bank’s positive catalyst watch list in a 17-page report out Sunday. His price target of $14 implied roughly 34% upside from the stock’s close on Friday. “In addition to our positive sector stance into the year-end (i.e. 35% QoQ PV growth in 4Q24 vs. seasonality ~20%, click here), XPeng’s upcoming new product strategy, advancing in-house technology and solid 3Q earnings as well as strength in 4Q vehicle delivery should altogether support its share price,” the analyst wrote. Pointing to Xpeng’s technology day later this week, Lai believes the company will introduce a new product or powertrain strategy, and sees the potential for extended range electric vehicles (EREV) and a new battery electric vehicle (BEV) model in the first half of next year. This comes amid JPMorgan’s forecast that EREVs and plug-in hybrid electric vehicles combined will make up about 60% of the new energy vehicle market by 2030 – almost double last year’s figure. Lai also anticipates the announcement of a next-generation autonomous driving strategy, which could include the use of in-house chips to power Xpeng’s future self-driving vehicles. He also sees the company touching on other initiatives, such as Xpeng Robot, likely aimed at business or industrial use. “We believe XPeng’s future models will all adopt [a] visual-based solution with [a] competitive price point for buyers (e.g. Max version of Mona 3 sedan at ~Rmb150k from 1Q25),” he continued. At current exchange rates, that’s equal to a vehicle priced at a little more than $21,000. Another event that could drive the stock higher is Xpeng’s third-quarter results next month, which Lai thinks will show expanded gross profit margins. Moreover, Xpeng is likely to forecast a 77% increase in fourth quarter deliveries, he said. Heading into 2025, Xpeng should see more volume growth, JPMorgan said, with the bank forecasting 72% volume growth in 2025. As a result, Xpeng should see positive free cash flow next year and a profit in 2026, according to Lai. XPEV 6M mountain XPEV, 6-month While shares are down more than 28% this year, they’ve advanced more than 24% in the past three months and more than 51% in the past six months.