On Friday, JPMorgan initiated coverage on WeRide Inc (NASDAQ: WRD), bestowing an Overweight rating on the stock along with a price target of $21.00. Currently trading at $14.50, the $4 billion market cap company has received strong analyst support, with targets ranging from $19.16 to $23.02. The firm's analysis points to WeRide's position as a prominent player in the autonomous driving (AD) industry, with a diverse range of technologies spanning Level 2 to Level 4 automation. These technologies include advanced driver-assistance systems (ADAS), and autonomous vehicles such as robobuses, robosweepers, robovans, and robotaxis.
WeRide, noted for its pioneering efforts in the AD sector, has the distinction of being the first company in this domain to have its products operational and undergoing testing in a broad international landscape, covering 30 cities and nine countries across Asia, the Middle East, and Europe. With revenues of $52 million in the last twelve months, the company faces growth challenges, showing a 19% year-over-year decline. JPMorgan's analyst highlighted the company's strategic positioning and its potential to capitalize on the increasing global adoption of autonomous driving technologies over the next three to five years.
The Overweight rating implies that JPMorgan anticipates WeRide's stock performance to outperform the average return of the stocks that the firm covers over the next six to twelve months. According to InvestingPro analysis, WeRide appears overvalued at current levels, with a "Weak" overall financial health score of 1.52 out of 5. The price target of $21.00 is based on a sum of the parts (SOTP) valuation method, which assesses the value of the company's various segments.
JPMorgan's coverage initiation and positive outlook on WeRide reflect the growing interest and confidence in the AD sector, as companies like WeRide continue to advance their technologies and expand their global footprint. The firm's analysis suggests that WeRide is well-positioned to benefit from the industry's expansion and the increasing demand for autonomous driving solutions. For deeper insights into WeRide's valuation metrics and growth potential, InvestingPro subscribers can access over 30 additional financial metrics and exclusive ProTips.
In other recent news, WeRide Inc., a leader in Level 4 and above autonomous driving technology, has successfully completed its initial public offering (IPO) on the Nasdaq Global Select Market. The IPO involved the sale of 7,742,400 American depositary shares (ADSs), each priced at $15.50, potentially raising approximately $458.5 million in gross proceeds. This financial milestone was facilitated by a group of underwriters led by Morgan Stanley (NYSE:MS) Asia Limited, J.P. Morgan Securities LLC, and China International Capital Corporation Hong Kong Securities Limited.
In parallel, Morgan Stanley initiated coverage on WeRide, granting it an Overweight rating with a price target of $23.00. This forward-looking valuation is based on 30 times the company's projected 2025 sales. The investment firm's analysis underlines WeRide's early advantage in high-autonomy vehicle technology and its international partnerships, while also noting potential regulatory challenges.
Morgan Stanley's valuation model suggests WeRide's long-term growth potential can be better captured through a discounted cash flow calculation, given the expected short-term fluctuations in earnings and cash flow. The firm anticipates WeRide to reach a net profit break-even point by 2027, indicating optimism about the company's future financial performance amidst the uncertainties in the autonomous driving industry. These are recent developments for WeRide.
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