Jefferies maintains Buy on BYD stock with HK$447 target

On Tuesday, Jefferies reiterated a Buy rating on BYD Co Ltd (002594:CH) (OTC: OTC:BYDDY), with a price target of HK$447.00, following the company's positive earnings alert. The company, currently valued at $128.7 billion, demonstrates exceptional financial strength with a perfect Piotroski Score of 9, according to InvestingPro analysis. This score, along with BYD (SZ:002594)'s "GREAT" overall financial health rating, suggests strong operational efficiency and robust financial position. BYD's first-quarter earnings for 2025 showed a significant increase of 86%-119% year-over-year, reaching RMB8.5-10 billion. This performance aligns with Jefferies' estimates and is attributed to robust growth in new energy vehicle (NEV) sales, cost savings from supply chain efficiencies, and a spike in high-margin export sales.

BYD's NEV sales reached 1 million units in the first quarter of 2025, marking a 60% increase from the previous year. The company's export sales were particularly strong, with 206,000 units sold overseas, an increase of 111% compared to the same period last year. This impressive growth aligns with BYD's broader performance metrics, including a 29% year-over-year revenue growth and a healthy gross profit margin of 19.1%. InvestingPro analysis indicates the stock is currently trading below its Fair Value, presenting a potential opportunity for investors. These exports accounted for 21% of BYD's total sales volume in the quarter, compared to 8% and 16% in the fourth quarter of 2024 and the first quarter of 2024, respectively.

The earnings alert also highlighted BYD's net profit per vehicle, which ranged between RMB8,000 and RMB9,400 in the first quarter of 2025, compared to RMB6,600 in the same quarter of the previous year. The sales mix for the quarter showed the BYD brand selling 950,000 units, up 61% year-over-year, with models such as Han, Song, Qin, Yuan, Seal, and Seagull contributing significantly to the total volume. Additionally, the Denza brand sold about 33,000 units, up 37% year-over-year, and the FCB brand sold 19,000 units, a 74% increase from the previous year.

Looking ahead to the second quarter of 2025, Jefferies highlighted several focus areas for BYD. With a P/E ratio of 23.7 and a notably low PEG ratio of 0.63, the company appears well-positioned for growth. Discover 12 additional exclusive insights and detailed financial metrics with InvestingPro, including advanced valuation models and comprehensive industry comparisons. These include managing the stock levels of older models, monitoring weekly new orders following price cuts in April 2025, customer feedback on BYD's smart driving versions, the introduction of new models for Denza and FCB brands, the sustainability of strong export sales growth amid global tariff challenges, and updates on manufacturing costs in BYD's overseas factories.

In other recent news, BYD Co Ltd reported a significant increase in its fourth-quarter earnings, with revenue reaching RMB275 billion and net profit at RMB15 billion, marking a 37% and 29% year-over-year growth, respectively. Despite facing gross margin pressure due to a reclassification of RMB12.4 billion in warranty costs, the company's vehicle unit profit remained stable. Jefferies analyst Johnson Wan responded to these results by raising the price target for BYD to HK$447.00, maintaining a Buy rating, reflecting confidence in the company's growth trajectory.

Meanwhile, Bernstein analysts, led by Eunice Lee, have maintained their Outperform rating on BYD with a price target of HK$350.00. Bernstein's analysis underscores BYD's competitive cost structure and strong research and development capabilities as key factors in maintaining its market share leadership in China. The firm projects ambitious sales volumes for BYD, forecasting 5.1 million units in 2025 and 5.7 million units in 2026, including significant international sales. Furthermore, Bernstein estimates favorable earnings per share for BYD, with projections of RMB 13.61 in 2024, RMB 17.85 in 2025, and RMB 20.32 in 2026. These developments showcase a positive outlook for BYD's future performance in both domestic and international markets.

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