Morgan Stanley analyst Tim Hsiao maintained a Buy rating on XPeng, Inc. Class A today and set a price target of HK$108.00.
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Tim Hsiao has given his Buy rating due to a combination of factors surrounding XPeng, Inc.’s strategic collaboration with Volkswagen (VW). The partnership involves the integration of XPeng’s E/E Architecture into VW’s ICE/PHEV platforms in China, which is expected to create a new revenue stream for XPeng. Although the initial contribution may be modest, the potential for growth should not be underestimated given VW’s substantial sales volume in China and the possibility of expanding this collaboration internationally.
Moreover, the collaboration is projected to enhance XPeng’s financial performance significantly. By 2026, it is estimated that a portion of VW’s platforms will adopt XPeng’s technology, translating to substantial revenue and profit increments. Specifically, the high gross margin from EEA IP licensing could lead to a 3-5% increase in gross profit, which aligns with the strategic goals of XPeng to enhance its bottom line. These financial prospects underpin Tim Hsiao’s optimistic outlook and Buy rating for XPeng’s stock.
According to TipRanks, Hsiao is an analyst with an average return of -1.8% and a 40.00% success rate. Hsiao covers the Consumer Cyclical sector, focusing on stocks such as Nio, XPeng, Inc. ADR, and Hesai Group Sponsored ADR.