JPMorgan remains bullish: BYD shares fall: Is there a risk of losing market leadership in the electric vehicle sector?

Shares in Hong Kong-listed electric car maker BYD lost 12% in November, while shares in rivals Tesla and XPeng gained more than 15%. Investors are concerned about BYD’s ability to meet its sales targets due to a tough macroeconomic outlook and price wars with competitors. The forward price-to-earnings ratio has fallen to its lowest level in nearly twelve years. Higher retail sales, price cuts, rising inventories and increased competition are the main reasons for investor reluctance, according to UOB Kay Hian Holdings, the only agency that gave BYD a Sell rating. The emerging alliance led by Huawei could be a serious threat to BYD. JPMorgan analyst Nick Lei rates the stock Overweight due to high leverage and low valuation. He lowers the target price from 310 to 270 Hong Kong dollars, which corresponds to a probability of about 30%. The average analyst target price is 65% above the last closing price.