The Consensus EPS Estimates For XPeng Inc. (NYSE:XPEV) Just Fell Dramatically
One thing we could say about the analysts on XPeng Inc. (NYSE:XPEV) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business. The stock price has risen 8.8% to US$9.62 over the past week. It will be interesting to see if this downgrade motivates investors to start selling their holdings.
Following the downgrade, the most recent consensus for XPeng from its 30 analysts is for revenues of CN¥37b in 2023 which, if met, would be a sizeable 36% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 26% to CN¥7.85. However, before this estimates update, the consensus had been expecting revenues of CN¥45b and CN¥6.94 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.
Check out our latest analysis for XPeng
The consensus price target fell 10% to CN¥83.78, implicitly signalling that lower earnings per share are a leading indicator for XPeng's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values XPeng at CN¥38.33 per share, while the most bearish prices it at CN¥4.21. This shows there is still some diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that XPeng's revenue growth is expected to slow, with the forecast 36% annualised growth rate until the end of 2023 being well below the historical 77% p.a. growth over the last three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. Even after the forecast slowdown in growth, it seems obvious that XPeng is also expected to grow faster than the wider industry.
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. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of XPeng.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for XPeng 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.
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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.
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