BofA cuts XPeng price target to $13.50, maintains buy rating
XPEV
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On Wednesday, BofA Securities adjusted its outlook on XPeng Inc. (NYSE: NYSE:XPEV), reducing the price target on the company’s shares to $13.50 from the previous $14.80, while sustaining a Buy rating on the stock. The adjustment follows the electric vehicle manufacturer’s fourth-quarter earnings report for the fiscal year 2023.
XPeng’s revenue for the fourth quarter was reported at 13 billion yuan, marking a significant year-over-year increase of 154% and a 53% rise from the previous quarter. However, the gross margin was recorded at 6.2%, which, despite an 8.9 percentage point increase quarter-over-quarter, fell short of the forecasted 7.4% and showed a decline of 2.4 percentage points from the same period last year.
The vehicle margin for the quarter stood at 4.1%, which is an improvement of 10.2 percentage points compared to the previous quarter, but a drop of 1.6 percentage points on a year-over-year basis. This decline was attributed to inventory provisions and losses on purchase commitments resulting from model upgrades and sales promotions, which had a negative impact of 1.9 percentage points.
XPeng’s loss from operations was approximately 2.1 billion yuan for the quarter, which is an improvement from the 2.5 billion yuan loss in the fourth quarter of 2022 and the 3.2 billion yuan loss in the third quarter of 2023. The company also recognized a fair value loss on derivative liability related to a share purchase agreement with Volkswagen (ETR:VOWG_p) of around 560 million yuan in the fourth quarter.
Despite these losses, the net loss attributed to ordinary shareholders improved, coming in at 1.3 billion yuan, compared to 2.4 billion yuan in the fourth quarter of 2022 and 3.9 billion yuan in the third quarter of 2023. Additionally, XPeng reported positive operating cash flow for the fiscal year 2023.
