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On Thursday, BofA Securities analyst Fiona Liang upgraded Nexteer Automotive Group Ltd. (1316:HK) (OTC: NTXVF) stock rating from Underperform to Buy and increased the price target to HK$6.40, up from the previous HK$2.80. The revision reflects a positive outlook on the company’s growth prospects for the year 2025.
Liang cited several factors contributing to the optimistic view, including an expected sales growth of 2% year-over-year in the US for Nexteer, contrasting with a 5% decline in 2024. This anticipated growth is attributed to a recovery in sales volume from key clients such as Stellantis (NYSE:STLA), Ford (NYSE:F), and General Motors (NYSE:GM). Additionally, BofA’s US auto team projects a 7% increase in US light vehicle production for 2025, a notable rise from the stagnant production levels in 2024.
Nexteer is also expected to see margin improvements due to a favorable change in the regional mix, with a higher share of sales coming from the Asia-Pacific region, and EBITDA margin enhancements in North America following factory restructuring. The company has guided for a low-teen blended EBITDA in 2024, improving from 9.4% in the first half of the year, with further advancements anticipated in 2025.
The analyst also highlighted Nexteer’s solid performance in the Asia-Pacific market, particularly due to strong sales from major Chinese clients including BYD (SZ:002594), Geely, Xiaomi (OTC:XIACF), Chery, and XPeng (NYSE:XPEV). These factors collectively underpin the upgraded rating and price target for Nexteer’s stock as the company navigates the automotive industry’s landscape in the coming year.
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