Citi Elevates Price Targets for Chinese EV Titans: Xpeng Inc and Li Auto Inc
Investing.com—In a strategic move, Citi has adjusted its price targets for two prominent Chinese electric vehicle (EV) manufacturers, Xpeng Inc (NYSE: XPEV) and Li Auto Inc (NASDAQ: LI), citing robust domestic sales and a resilient market environment, despite broader economic challenges in China.
Strategic Price Target Adjustments
Citi has increased its price target for Xpeng Inc to $10.30, up from $8.90, while maintaining a Neutral rating. For Li Auto Inc, the price target has been elevated to $25.50 from $21.60, with a Neutral rating also being retained. Notably, Xpeng’s U.S. shares closed at $10.70 on Tuesday, whereas Li Auto’s shares settled at $24.72.
Strong Sales Forecasts and Product Pipeline
The brokerage firm forecasts higher sales for both companies, buoyed by the imminent launch of the Xpeng P7 and a robust product lineup extending into 2025. Citi also predicts a reduction in losses for Xpeng over the next two years, indicating a positive financial trajectory.
Li Auto is expected to maintain its sales momentum following impressive sales figures in July and August. Consequently, Citi has revised its sales and profit forecasts upward for the company. The firm underscores that the current valuations of both stocks are fair, with balanced risks and rewards.
Resilience Amid International Trade Barriers
Despite facing substantial import tariffs from the European Union, the U.S., and Canada earlier this year, Chinese EV manufacturers have demonstrated remarkable resilience. The impact of these tariffs is anticipated to be minimal, as domestic demand constitutes the majority of sales for the sector. It’s noteworthy that among the three countries, only the EU represents a significant market for Chinese EV imports.
Analysis: What This Means for Investors
Simplified Breakdown:
- Citi's Optimism: Citi has raised its price targets for two major Chinese EV makers—Xpeng and Li Auto—suggesting confidence in their future performance.
- Sales Growth: Both companies are expected to see increased sales, driven by new product launches and a strong lineup of vehicles through 2025.
- Financial Outlook: Xpeng is likely to experience smaller losses, while Li Auto is projected to continue its sales growth and boost profitability.
- Market Resilience: Despite international tariffs, the domestic demand in China is strong enough to sustain the sector's sales, mitigating the impact of these trade barriers.
Impact on Your Finances:
- For Investors: If you hold or plan to invest in Xpeng or Li Auto, Citi’s revised targets and positive outlook could indicate potential growth and returns on your investment.
- For EV Enthusiasts: The resilience of Chinese EV makers suggests continued innovation and availability of advanced electric vehicles in the market.
- For Market Watchers: Understanding the dynamics of international trade and domestic demand can help in predicting market trends and making informed financial decisions.
In conclusion, Citi’s updated price targets and optimistic forecasts for Xpeng Inc and Li Auto Inc highlight the resilience and growth potential of Chinese EV manufacturers, even amidst global economic challenges and trade barriers.