UBS analyst Paul Gong downgraded Nio (NYSE: NIO) to Neutral from Buy and upgraded XPeng (NYSE: XPEV) to Buy from Neutral in a note to clients Thursday.
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Despite the rating changes, the electric vehicle companies' share prices went in opposite directions, with Nio closing the session up 1.3%, while XPeng shares declined 0.37%.
The analyst cut Nio's price target to $13 from $32, telling investors that while sufficient expectations for its ET5 model have been priced into the stock, he expects execution challenges. He added that Nio's monthly sales volumes did not show an obvious improvement despite three new models launched in 2022, which Gong feels is due to internal cannibalization and limited differentiation. As a result, he remains cautious about the company's longer-term efficiency and profitability.
Despite upgrading the stock, Gong also cut XPeng's price target to $13 from $34, stating investors have turned “pervasively bearish” on the stock due to recent sales weakness and disappointing execution on the G9 launch, however, he believes XPeng could enhance its internal management and product lineup, which could push its monthly sales volume from 5,000 units in October to 10,000 per month following.
So far, in 2022, Nio shares are down 68%, while XPeng is down 84%.
Elsewhere on Thursday, Barclays analyst Jiong Shao cut the firm's price target on Nio to $18 from $19, maintaining an Overweight rating on the shares. Shao continues to believe Nio has broadly executed positively in its product portfolio expansion and manufacturing capacity upgrades. However, the analyst is concerned about raised expenses, which could remain longer than the company anticipates.
