It's been a pretty great week for XPeng Inc. (NYSE:XPEV) shareholders, with its shares surging 11% to US$9.15 in the week since its latest yearly results. The statutory results were not great - while revenues of CN¥27b were in line with expectations,XPeng lost CN¥10.67 a share in the process. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for XPeng

Taking into account the latest results, the current consensus from XPeng's 31 analysts is for revenues of CN¥36.3b in 2023, which would reflect a substantial 35% increase on its sales over the past 12 months. Losses are predicted to fall substantially, shrinking 35% to CN¥6.94. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥45.4b and losses of CN¥6.90 per share in 2023. So there's definitely been a change in sentiment in this update, with the analysts administering a substantial haircut to next year's revenue estimates, while at the same time holding losses per share steady.

The analysts have cut their price target 7.7% to US$12.67per share, signalling that the declining revenue and ongoing losses are contributing to the lower valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on XPeng, with the most bullish analyst valuing it at US$38.29 and the most bearish at US$4.20 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await XPeng shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the XPeng's past performance and to peers in the same industry. It's pretty clear that there is an expectation that XPeng's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 35% growth on an annualised basis. This is compared to a historical growth rate of 77% over the past three years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 18% per year. So it's pretty clear that, while XPeng's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most obvious conclusion is that the analysts made no changes to their forecasts for a loss next year. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple XPeng analysts - going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for XPeng that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here