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Goldman Sachs analyst Fei Fang raises price targets on Chinese electric vehicle manufacturers
NIO
and
Li Auto
– a lot – in a change that seems to reflect a big shift in his thinking.
His target for the NIO stock price (ticker: NIO) rose 666%, from $ 7.70 per share to $ 59. He increased his call on Li shares by 191%, to $ 60 from $ 20.60. Fang also upgraded the NIO stock to the equivalent of Hold from Sell. keep a buy note on Li shares.
“We are in a multi-year transition where passenger vehicles are moving from fossil-fueled engines and transmission systems to batteries, electric motors, inverters and associated computer systems,” Fang wrote in her research report.
EVs will likely account for 20% of new cars sold in China in 2025, he said, down from 13% he had assumed earlier. Its EV penetration assumption for 2030 fell from 37% to 53% in 2030. By 2050, Fang said, electric vehicles will likely account for 80% of new cars sold in China.
Falling battery costs are a big part of his final thinking. “The price of the battery pack has fallen much faster than our forecasts [and the] consensus estimate, ”he wrote. In the past, Fang expected a 10% annual reduction in battery costs, but said he sees that rate accelerate, thanks to new technologies and competitive prices from battery manufacturers.
It’s a bullish report, but stocks are not going up. NIO, Li and their peers
XPeng
(XPEV) were all on the rise in pre-market commerce, but all have lost that ground. Li stock closed 3.1% lower on Tuesday. XPeng shares fell 10.6% and NIO shares fell 10.3%. Fang does not cover XPeng shares.
the
Dow Jones Industrial Average
and
S&P 500,
by comparison, they increased by 0.6% and 1.1% respectively.
It might sound like a counterintuitive reaction, but stocks have been going up a lot lately. Shares of NIO, Xpeng and Li have risen 124%, 142% and 90%, respectively, in the past three months.
In addition, other analysts were a little ahead of Fang in raising their targets for company stock prices. On Tuesday, analysts’ average price target had risen 180% in the past three months for NIO shares, while Li Auto’s target was up 94%.
The average target price of XPeng shares has risen by over 80% since September 21. This is the first day that analysts have started covering the stock. XPeng and Li Auto sold shares through initial public offerings this summer.
The average price targets for NIO and XPeng stocks are lower than those for stocks. The average target for XPeng stock is around $ 48, while stocks are above $ 52. NIO stock is above $ 45, but the average target price is around $ 43.
Li’s price and analyst calls are more closely aligned. The average price target is around $ 36.50, while stocks are around $ 34.80.
All three are in tears and all three take a break despite the bullish report. Investors seem to be balancing a lot of good news about the industry and what to pay for stocks.
Write to Al Root at [email protected]
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