NIO is selling essentially all the cars it can produce.
Nicolas Asfouri/FP via Getty Images
Macquarie analyst Erica Chen launched coverage of three U.S.-listed Chinese electric vehicle makers: NIO , XPeng , and Li Auto , saying investors should buy the stocks.
Investors appear to be listening. All three stocks were higher Wednesday, though other EV stocks gained ground, too. NIO (ticker: NIO), XPeng (XPEV) and Li (LI) shares were up 2.7%, 3.6%, and 2.2%, respectively, in early trading. Tesla (TSLA) and Rivian Automotive (RIVN) shares gained 1% and 1.5%.
It’s a positive day for most stocks. The S&P 500 and Dow Jones Industrial Average are up 0.4% and 0.3%, respectively.
Chen rated NIO stock at Outperform, the Macquarie equivalent of a Buy rating, with a target of $37.70 for the price, well above the Wednesday morning level of near $31. She projects NIO’s sales will grow at roughly 50% for the next couple of years.
Unit sales growth for EVs in China, including plugin hybrid vehicles, came in at roughly 180% in 2021 compared with 2020. At NIO, which is selling more or less all the vehicles it can make, the figure was about 109%. Almost all of its vehicles are for the Chinese market, though a small number are sold in Europe.
Chen’s price target implies gains of about 25% from recent levels, but it is one of the more conservative on Wall Street. About 84% of analysts covering the company rate the shares at Buy, while the average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average price target for NIO shares is about $59, a bit less than double the recent price.
Chen also initiated coverage of XPeng stock with an Outperform rating.
Her targets for XPeng, and Li Auto, relate to the companies’ Hong Kong listed shares, rather than the New York-listed ones. Chen’s XPeng target is 221 Hong Kong dollars, which implies upside of about 20% for both U.S. and Hong Kong investors.
That is also a little more conservative than what Chen’s Wall Street peers have forecast. The average call on the price of XPeng’s U.S.-listed stock is about $64 a share, implying gains of about 38% from recent levels.
XPeng is as popular as NIO, with Buy ratings from 85% of the analysts covering the company.
Chen’s price target for Li is HK$151 per share, which implies gains of about 28% for U.S. or Hong Kong investors. The average U.S.-based target price for Li stock is about $46.50, pointing to gains of 50% from recent levels.
Li is the most popular of the three among analysts. With Chen’s new Buy rating, now about 91% of analysts rate shares the equivalent of Buy.
Still, based on analyst’s price targets and ratings, investors can’t really go wrong with any of the three stocks.
Write to Al Root at firstname.lastname@example.org