On Monday, Citi began coverage of ZEEKR Intelligent Technology (NYSE: ZK) with a Buy rating and established a price target of $32.40. The firm's optimistic stance on ZEEKR is based on several key factors.
Citi highlights the company's asset-light model, which benefits from the backing of the Geely group, as well as a robust upcoming model cycle. Additionally, the firm anticipates continued revenue and earnings contributions from strategic partnerships with Ningbo Viridi and CEVT.
The price target set by Citi at $32.40 is derived from a valuation pegged at 0.7 times the estimated 2024 price-to-sales (P/S) ratio. This valuation is one standard deviation below the weighted average 2024 P/S ratio of other new energy vehicle (NEV) players in the market, which includes prominent companies like BYD (SZ:002594), NIO, Li Auto (NASDAQ:LI), Xpeng (NYSE:XPEV), and Leapmotor (HK:9863).
Citi's coverage initiation and the accompanying Buy rating suggest confidence in ZEEKR's growth trajectory and its ability to capitalize on its strategic relationships and upcoming product launches. The price target of $32.40 reflects this positive outlook, despite being set conservatively relative to the broader NEV industry's valuation metrics.
In other recent news, ZEEKR Intelligent Technology has been the subject of positive attention from financial analysts. BofA Securities initiated coverage on ZEEKR with a Buy rating and a price target of $35.00, citing a projected compound annual growth rate (CAGR) of 27% in revenue from 2024 to 2026. The firm also anticipates an improvement in ZEEKR's gross profit margin from 13.3% in 2023 to 16.1% in 2026.
Similarly, Goldman Sachs (NYSE:GS) initiated coverage on ZEEKR, issuing a Buy rating with a price target of $34.00. The firm predicts ZEEKR's 2024 production volume to reach 215,000 units, based on an estimated CAGR of 56% from 2023 to 2026.
In other corporate developments, ZEEKR announced the pricing of its initial public offering (IPO) at $21.0 per American Depositary Share (ADS). The IPO consists of 21,000,000 ADSs, and if the underwriters exercise their option to purchase additional ADSs fully, the total gross proceeds from the offering could reach approximately $507.2 million.
These recent developments highlight ZEEKR's growth trajectory and potential in the electric vehicle market.
InvestingPro Insights
ZEEKR Intelligent Technology (NYSE: ZK) has been making waves in the financial markets, with Citi initiating coverage with a bullish stance. To add further context to this outlook, InvestingPro provides key metrics and tips that are pertinent to the company's current financial health and future prospects.
InvestingPro Data shows ZEEKR's market capitalization stands at $5.24 billion, reflecting the significant scale the company has achieved in the competitive NEV space. Furthermore, the company has witnessed a remarkable revenue growth of 60.46% over the last twelve months as of Q1 2024, indicating robust sales performance. Despite the impressive top-line growth, ZEEKR operates with a negative P/E ratio of -3.73, suggesting that the company is currently not profitable.
An InvestingPro Tip highlights that ZEEKR is a prominent player in the Automobiles industry, with analysts anticipating sales growth in the current year. This aligns with Citi’s positive outlook on the company's upcoming model cycle and strategic partnerships, which could be significant drivers of revenue.
Another InvestingPro Tip to consider is that the company is trading near its 52-week low, with the price having fallen significantly over the last three months. This could indicate a potential buying opportunity for investors, especially in light of the optimistic sales growth expectations and the company's position in the market.
For investors looking for comprehensive analysis and additional insights, there are over 10 InvestingPro Tips available for ZEEKR, which can be accessed through InvestingPro's platform. These tips provide a deeper dive into the company's financials, market performance, and industry standing.
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