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XPeng shares have been upgraded twice following Wednesday’s news of a partnership with VW.
Qilai Shen/Bloomberg
The Chinese electric-vehicle maker
XPeng
dropped a bombshell Wednesday, announcing a partnership with
Volkswagen
.
It was welcome news on Wall Street.
XPeng (ticker: XPEV) shares have caught a couple of upgrades since then. First, Macquarie analyst Erica Chen upgraded shares to Hold from Sell on Thursday. On Friday, Jefferies analyst Johnson Wan upgraded XPeng to Buy from Hold. His price target for XPeng’s U.S.-listed American depositary receipts, or ADRs, went to $25.30 from $7.80 a share.
Volkswagen (ticker: VOW3. Germany) is the reason. The German auto company is investing $700 million in XPeng and jointly developing EVs with its Chinese counterpart. The deal sent XPeng stock up almost 27% on Wednesday. Wan says the partnership will help make XPeng a global brand.
Volkswagen gets benefits too. “VW’s China domestic EV sales market shares declined from 2022’s 3.5% to 2.4% [in the first half],” wrote Citi analyst Jeff Chung in a Wednesday report. “It’s necessary to seek a new strategy in order to prevent long-term market share decline in China.”
XPeng ADRs were up another 6.8% in premarket trading Friday.
S&P 500
and
Nasdaq Composite
futures are up 0.4% and 0.8%, respectively.
With the upgrade, 60% of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target, however, is just $12.45 a share. XPeng ADRs were at $21.52 in premarket trading. ADRs have added about $7 this week.
Coming into Friday trading, XPeng stock is down about 17% over the past 12 months. Falling deliveries amid industry growth have weighed on investor sentiment.
XPeng delivered about 41,000 vehicles in the first half of 2023, down from 69,000 in the first half of 2022. Overall battery-electric sales in China are up about 30% year to date, hitting roughly 2.5 million units.
Write to Al Root at [email protected]
Source: https://www.barrons.com/articles/buy-xpeng-stock-vw-deal-partnership-74abdd31?siteid=yhoof2&yptr=yahoo