![Three reasons why Citi cut price targets for XPeng](https://i-invdn-com.investing.com/news/LYNXNPEBAG0BO_L.jpg)
©Reuters. 3 Causes Why Citi Minimize Worth Targets for XPeng (XPEV)
Citi Analysis reiterated a promote ranking on XPeng Inc. (NYSE:) and lowered their 12-month worth goal on the auto firm’s shares to US$7.30/HK$28.30 (from US$10.10/HK$39.60) as a result of “possible undershoot on quantity in Mar 24E, potential tepid X9 orders and an unsustainable quantity push technique from 2Q24.”
As a consequence of gradual gross sales and seasonality, Citi expects Xpeng gross sales to fall beneath January 2024 ranges in March 2024, posing dangers to first quarter volumes and margins. A notable decline in electrical automobile gross sales costs of 20.6% all through 2023, in comparison with 7.6% for German luxurious automobiles, is elevating considerations. The EV efficiency of January 2024 additionally lags behind combustion engine automobiles.
Citi means that a good portion of anticipated EV demand in 2024 has already been absorbed by 2023 as a result of substantial worth reductions. To extend quantity, Citi XPeng is trying to additional cut back costs beginning in March 2024.
Ought to the rise in automotive gross sales result in greater losses and money movement issues for Xpeng, the corporate might have to chop manufacturing to economize and keep afloat. This might lead to a gradual lack of market share to competing automotive producers.
Highlighting the considerations, Citi additionally highlights that the Rmb200-300k BEV phase will face essentially the most tough provide/demand relationship in 2024.
Shares of XPEV ended Wednesday down 3.7%.