On Tuesday, BofA Securities updated its outlook on XPeng (NYSE:XPEV), increasing the electric vehicle manufacturer's price target to $16.20 from the previous $15.70, while keeping a Buy rating on the stock. The adjustment follows XPeng's third-quarter financial results for the year 2024, which were announced recently.
XPeng reported third-quarter sales of RMB 10.1 billion, marking an 18% year-over-year increase and aligning with BofA Securities' projections. The gross profit margin (GPM) showed significant improvement, reaching 15.3%, which was higher than the anticipated 14.2%. This increase in GPM was attributed to a reduction in battery costs and a surge in sales.
The company's vehicle margin also experienced a substantial rise, recorded at 8.6%, which is an improvement of 14.7 percentage points year-over-year and 2.2 percentage points quarter-over-quarter. This figure surpassed the estimated vehicle margin of 6.8%. The operating expense to sales ratio demonstrated a decline, sitting at 32.3%, indicating a decrease of 2.8 percentage points year-over-year and 5.1 percentage points quarter-over-quarter.
Despite these positive indicators, XPeng posted a net loss of RMB 1.8 billion for the third quarter. The company incurred a RMB 162 million fair value loss on derivative liability, primarily due to its acquisition of DiDi's smart auto business. This fair value loss represented a shift from a RMB 17 million gain in the second quarter of 2024.
However, when excluding the fair value loss impact and share-based compensation (SBC) expenses, the non-GAAP net loss for XPeng was RMB 1.5 billion for the quarter, which was more favorable than the RMB 2.1 billion loss anticipated by BofA Securities.
In other recent news, XPeng, a Chinese electric vehicle manufacturer, has seen significant developments. The company's second-quarter 2024 financial report revealed a 60% year-over-year revenue growth and a gross margin improvement of 14%, despite a net loss of 1.29 billion yuan. Morgan Stanley (NYSE:MS) maintains an Overweight rating on XPeng stock and increased the stock's price target to $17.00, citing the company's new model launches and overseas expansion.
Analysts from JPMorgan (NYSE:JPM) also maintained an Overweight rating, anticipating a strong third-quarter performance and robust vehicle delivery figures for the fourth quarter. However, CFRA downgraded XPeng's stock from Hold to Strong Sell due to concerns over the company's market position and financial health.
In technology news, XPeng introduced its "Kunpeng Super Electric System," an extended-range hybrid technology. The company also secured spots on both the "Fortune Tech 50" and "Fortune China 500" lists, reflecting its advancements in AI-defined mobility technology and autonomous driving.
InvestingPro Insights
XPeng's recent financial performance, as highlighted in the article, is reflected in several key metrics from InvestingPro. The company's revenue growth remains strong, with a 72.08% increase over the last twelve months as of Q2 2024. This aligns with the 18% year-over-year sales growth reported in the third quarter.
Despite the improved gross profit margin mentioned in the article, InvestingPro data shows that XPeng still faces challenges with profitability. The company's gross profit margin for the last twelve months stands at 7.29%, which, while improved, indicates there's still room for enhancement. This is further emphasized by an InvestingPro Tip noting that XPeng "suffers from weak gross profit margins."
Another relevant InvestingPro Tip states that XPeng "holds more cash than debt on its balance sheet." This financial position could provide the company with flexibility as it continues to navigate the competitive electric vehicle market and invest in growth initiatives.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for XPeng, providing deeper insights into the company's financial health and market position.
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