Macquarie Initiates Coverage on ZEEKR Intelligent Technology, Sets Price Target at $33 - Outperform Rating Assigned
Macquarie, a leading investment firm, has recently initiated coverage on ZEEKR Intelligent Technology (NYSE:ZK), a premium electric vehicle (EV) manufacturer. The firm has assigned ZEEKR an Outperform rating and set a price target of $33.00, citing the company's potential for significant growth within the premium battery electric vehicle (BEV) segment. Macquarie's analysis forecasts a robust growth trajectory for ZEEKR, with sales volumes expected to surge at a compound annual growth rate (CAGR) of 47% through the fiscal year 2026, potentially reaching 373,000 units.
The current business model of ZEEKR, which involves outsourcing EV production, is viewed as advantageous in the short term by Macquarie. While this strategy may limit profits initially due to fees, it allows ZEEKR to benefit immediately without the financial burdens of establishing its own production facilities. However, Macquarie also highlights that in the long term, owning production facilities could lead to greater economic benefits due to scale.
The Outperform rating reflects Macquarie's confidence in ZEEKR's ability to overcome challenges related to its complex corporate structure and low liquidity of its shares. The firm believes that the market has undervalued ZEEKR's stock and not fully accounted for its growth potential in the premium BEV market.
ZEEKR's strategic position in the EV industry and its ambitious growth targets are central to Macquarie's positive outlook. The company's focus on the premium BEV market is expected to drive its expansion and increase its local market share.
Analyzing ZEEKR's financial results, the company reported a substantial increase in total revenue in the second quarter of 2024, reaching 20 billion RMB. The gross profit margin (GPM) exceeded expectations, primarily driven by higher battery and component sales GPM. Despite these achievements, ZEEKR noted a non-GAAP net loss, leading to an adjustment in the price target by BofA Securities.
InvestingPro Insights: ZEEKR's recent market performance aligns with Macquarie's positive outlook, showing strong returns over the last week and month. While the company is not currently profitable, its position in the Automobiles industry and potential for growth in the premium BEV segment support investor confidence.
In conclusion, ZEEKR Intelligent Technology's partnership with Macquarie and its strategic position in the EV market make it a promising investment opportunity. Investors should consider the company's growth trajectory, financial health, and market position before making any investment decisions.