BofA Securities has adjusted its outlook on XPeng (NYSE: NYSE:XPEV), reducing the price target to $10 from the previous $11, while sustaining a Buy rating on the stock. The adjustment follows XPeng's announcement of its second-quarter financial results for 2024, which were disclosed on August 20.
The electric vehicle manufacturer reported a significant revenue increase, with total revenue reaching 8.1 billion yuan, marking a 60% year-over-year growth and a 24% rise from the previous quarter.
The gross profit margin (GPM) also saw an impressive improvement, climbing to 14%, which surpassed the anticipated 12.8%. This figure represents a 17.9 percentage point increase compared to the same period last year and is 1.1 percentage points higher than the last quarter.
XPeng's vehicle margin was another highlight, recorded at 6.4%, which is a considerable 15 percentage point increase year-over-year and a 0.9 percentage point increase from the previous quarter. This performance exceeded the analyst's estimate of 5.6%.
Additionally, the company managed to reduce its operating expenses to sales ratio to 37.5%, a decrease of 20 percentage points year-over-year and 4.3 percentage points from the last quarter.
Despite these positive indicators, XPeng still posted a net loss. The net loss attributed to ordinary shareholders for the second quarter was 1.29 billion yuan, which is slightly less than the 1.37 billion yuan loss in the first quarter of 2024.
The non-GAAP net loss for the quarter was reported at 1.22 billion yuan, an improvement over the 1.41 billion yuan loss in the previous quarter and better than the analyst's projection of a 1.3 billion yuan loss.
InvestingPro Insights
Following the latest financial disclosures by XPeng, BofA Securities has adjusted its price target, maintaining a positive outlook despite the company's reported net loss. To provide a broader context for investors considering XPeng's stock, InvestingPro offers additional insights. An important metric to consider is the company's cash position, with InvestingPro highlighting that XPeng holds more cash than debt on its balance sheet, which can be a cushion against market fluctuations. However, it's also noted that XPeng suffers from weak gross profit margins, which aligns with the company's recent report of an improved, yet still low, vehicle margin.
InvestingPro data shows that XPeng's market capitalization currently stands at $6.41 billion, and the stock is trading near its 52-week low, which may present a buying opportunity for investors who believe in the company's potential for recovery. Additionally, while the company has seen significant revenue growth of 41.64% over the last twelve months as of Q1 2024, the net loss and lack of profitability over the same period are factors that investors should weigh carefully.
With XPeng being a prominent player in the Automobiles industry, its stock price movements have been quite volatile, which can be both a risk and an opportunity for traders. For those seeking further guidance, InvestingPro offers a wealth of additional tips, including 12 more insights on XPeng's financial health and future prospects, available for users seeking an edge in their investment strategy.
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