UBS initiates Ecarx with Buy rating, sets $3.20 target

On Tuesday, UBS analyst Nora Min initiated coverage on Ecarx Holdings Inc. (NASDAQ: ECX) with a positive outlook, assigning a Buy rating to the company’s stock alongside a price target of $3.20. The target represents significant upside from the current price of $1.91, though InvestingPro data shows the stock has already gained over 14% in the past week. Min’s assessment highlights Ecarx Holdings as a key player in China’s smart cockpit market, where it stands as the third-largest producer by sales volume.

Ecarx Holdings, recognized for its role as the largest smart cockpit supplier to Geely, is anticipated to gain from the automaker’s ongoing supply chain consolidation. While InvestingPro data indicates the company is currently burning through cash with a negative EBITDA of $138.55 million, UBS’s report notes that Ecarx has successfully broadened its customer base to include major global original equipment manufacturers (OEMs). The company has shown strong revenue growth of 25.45% over the last twelve months. Specifically, the company is expected to begin realizing revenue in 2026 from a significant contract with a renowned European OEM, estimated to have a lifetime value of Rmb10 billion.

The UBS analyst is optimistic about Ecarx’s future financial performance, forecasting a compound annual growth rate (CAGR) of 52% in earnings from 2026 to 2028. Moreover, Min predicts a net profit turnaround starting in 2025. According to UBS, the market has yet to fully appreciate Ecarx’s potential for revenue growth.

The report also identifies Geely’s monthly sales momentum as a potential driver for Ecarx’s share price in the future. With these factors in mind, UBS’s initiation of coverage on Ecarx Holdings Inc. comes with expectations of a strong performance for the company’s stock.

In other recent news, ECARX Holdings, Inc. has been active in enhancing its offerings and financial standing. The company reported a significant 31% year-over-year revenue growth for the third quarter of 2024, reaching RMB1.4 billion, primarily driven by strong demand for its Antora and Makalu platforms. Despite a decrease in gross margin to 17% and a net loss of RMB0.97 per share, ECARX is focusing on cost optimization and manufacturing expansion.

Further, ECARX announced the integration of the DeepSeek-R1 model into its ECARX AutoGPT in-vehicle AI application, aiming to offer a more efficient, secure, and personalized user experience for automotive applications. This integration is expected to improve local processing capabilities, reduce latency, data transmission and storage costs, and decrease security certification expenses.

In addition to these developments, ECARX’s board of directors approved a plan to repurchase up to $20 million of its ordinary shares by September 30, 2025. This buyback program, funded from ECARX’s existing cash reserves, is a signal of confidence in the firm’s financial health and future prospects.

These are the latest developments from ECARX, a company that continues to innovate and expand in the global automotive industry.

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