Investing.com -- Citi lifted its rating on Xpeng Inc (NYSE:XPEV) stock to Buy from Neutral as the Wall Street firm expects higher projected volumes for the electric vehicle (EV) maker in 2025 and 2026.

The bank’s analysts hiked their forecast for XPeng's vehicle sales from 260,000 units in 2025 and 330,000 units in 2026 to 480,000 and 580,000 units, respectively.

This upgrade comes on the back of a strong order intake in February, the expected launch of 2-3 battery electric vehicles (BEV) and 1 extended-range electric vehicle (EREV) this year, and the anticipation of high demand for EVs in China.

In response to the revised volume forecast, Citi has also increased its revenue projections for XPeng, raising the 2025 and 2026 estimates from Rmb49.1 billion and Rmb59.0 billion to Rmb79.2 billion and Rmb93.3 billion, respectively.

Alongside the revenue adjustments, vehicle margin forecasts for the same years have been lifted by 2.3 to 3.2 percentage points, reaching 11.9% in 2025 and 13.5% in 2026.

As a result, the bottom line forecasts have shifted from a loss of Rmb4.9 billion in 2025 and Rmb3.9 billion in 2026 to a narrower loss of Rmb0.4 billion in 2025 and a profit of Rmb2.7 billion in 2026.

Citi's valuation upgrade is influenced by XPeng's consistent efforts in the AI/Robotics field, which could provide additional growth drivers for the company.

“Xpeng has expressed its commitment to the AI/Robotics field, and we see some upside risk to Xpeng if it achieves decent progress,” analysts said.

They have adopted a 2.5 times 2025 estimated price-to-sales (P/S) multiple, which is one standard deviation above the 2-year average level and an increase from the previous 1.9 times multiple.

In turn, the analysts have lifted their price target on XPeng from $13.70 to $29.00 (HK$53.30 to HK$113.00).

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