Macquarie upgrades Xpeng stock to Outperform after positive Q1 print

Investing.com -- Macquarie has lifted its rating on Xpeng (HK:9868) (NYSE:XPEV) stock to Outperform, following a stronger-than-expected first-quarter print and a positive outlook for the rest of the year.

The brokerage firm also raised its 12-month target prices by 7% and 9% to HK$93 and $24, respectively, maintaining its fiscal year 2025 (FY25) 2.0x price-to-sales (P/S) valuation multiple.

Xpeng reported first-quarter vehicle margins of 10.5%, up 50 basis points quarter-on-quarter, even as sales per car declined 4.4% quarter-on-quarter. Macquarie attributed the improvement to better cost controls and scale benefits.

Service margins also reached a record high of 66%, supported by stronger aftermarket profitability.

The company delivered 94,008 vehicles in the quarter, up 331% year-on-year

Moreover, gross profit margin (GPM) improved to 15.6%, driven by better cost control and an uptick in aftermarket revenue, while free cash flow came in at over RMB 3 billion.

The electric vehicle (EV) maker’s net loss declined to RMB 0.66 billion, moving closer to breakeven.

The second-quarter volume guidance midpoint of 105,000 units was above both Bloomberg and Macquarie estimates.

Meanwhile, revenue guidance of RMB 17.5–18.7 billion similarly topped consensus.

Xpeng management also reiterated its goal of more than doubling deliveries in 2025, implying more than 380,000 units, and looks for net profit breakeven by 4Q25 with high-teen GPM,” the analysts noted.

Model momentum continues to support Xpeng’s volume recovery. The upcoming launch of the G7 SUV and a refreshed P7 sedan are expected to strengthen the company’s product mix and improve margins.

Macquarie sees the ramp-up of these models as a key lever to maintain monthly sales above 40,000 units.

While Xpeng’s net profit improved partly due to low-visibility gains from government subsidies and FX, Macquarie’s confidence in execution has increased. “Xpeng continues to execute ahead of expectations in a difficult domestic EV market,” the analysts emphasized.

The report also flagged future catalysts, including overseas expansion and potential commercialization of humanoid robots and eVTOLs. Though Macquarie doesn’t expect these initiatives to contribute significantly in the short term, they could bolster the company’s positioning as a technology-driven automaker.

“Thus, successful commercialisation of its humanoid could help support a higher valuation multiple in the medium term,” the analysts added.

Macquarie raised its FY25 volume forecast by 5% and expects sales to reach RMB 81 billion, with adjusted net losses narrowing further.