What Does The Future Hold For XPeng Inc. (NYSE:XPEV)? These Analysts Have Been Cutting Their Estimates

The analysts covering XPeng Inc. (NYSE:XPEV) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the current consensus from XPeng's 33 analysts is for revenues of CN¥32b in 2023 which - if met - would reflect a major 36% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 25% to CN¥8.47. However, before this estimates update, the consensus had been expecting revenues of CN¥36b and CN¥7.80 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

See our latest analysis for XPeng

The consensus price target fell 17% to CN¥70.82, implicitly signalling that lower earnings per share are a leading indicator for XPeng's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic XPeng analyst has a price target of CN¥14.46 per share, while the most pessimistic values it at CN¥5.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting XPeng is an easy business to forecast or the underlying assumptions are obvious.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the XPeng's past performance and to peers in the same industry. It's pretty clear that there is an expectation that XPeng's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 51% growth on an annualised basis. This is compared to a historical growth rate of 66% over the past three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% annually. So it's pretty clear that, while XPeng's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for this year. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given the stark change in sentiment, we'd understand if investors became more cautious on XPeng after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple XPeng analysts - going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here