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XPeng downgraded at UBS, as stock has run up too much to keep buying

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XPeng Inc.

XPeng Inc. was downgraded Thursday at UBS, as analyst Paul Gong suggested the China-based electric vehicle company’s stock has run up too much to recommend investors buy at current levels.

Gong cut his rating to neutral, after starting coverage of the stock at buy on Sept. 25. The stock
XPEV,
+8.51%

went public on Aug. 27.

He’s still bullish on XPeng’s prospects, saying he believes the company continues to lead in China’s autonomous driving development race, ahead of competitors such as Nio Inc.
NIO,
+4.07%
,
Geely Automobile Holdings Ltd.
GELYY,
-3.87%

175,
-0.72%

and Great Wall Motor Co. Ltd.
601633,
-4.63%

2333,
-5.28%

“But after an over-200% rally, we believe investors more or less already recognize this,” Gong wrote in a note to clients. “Despite raising our volume forecasts on an increasingly positive long-term view (and reducing loss-per-share estimates), we view its potential upside/downside as largely balanced.”

Gong still more than doubled his stock price target to $59 from $25.

The stock rose 2.3% in premarket trading Thursday. It had rallied 7.0% on Wednesday, to halt a two-day tumble of 18.5%.

Read more about recent bounces in stocks of China-based EV makers.

Since Gong initiated XPeng at buy on Sept. 25, the stock had rocketed 212.3% through Wednesday. In comparison, Nio’s stock had soared 161.9%, Tesla Inc. shares
TSLA,
+3.36%

had climbed 39.6% and the S&P 500 index
SPX,
+0.14%

had gained 11.2%.

Gong also rates Nio at neutral, since Aug. 25, and has rated Tesla at neutral since March 24.

Nio shares edged up 0.8% ahead of Thursday’s open, while Tesla’s stock shot up 4.2% into record territory after Goldman Sachs upgraded the U.S. EV leader to buy from neutral.

Gong expects the electric vehicle share of China’s auto market to rise to 6% in 2021, from 5% this year, and to more than 20% in 2025 and to close to 50% in 2030.

So far, Gong believes Nio’s strength is based on branding and XPeng’s strength is on autonomous driving.

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