Bernstein starts Xiaomi at ‘outperform,’ sees EV push as key equity driver

Investing.com -- Bernstein initiated coverage of China’s Xiaomi (OTC:XIACF) Corp with an “Outperform” rating and a HK$55 price target, highlighting the company’s early success in electric vehicles and its broader ecosystem strategy as key drivers of future growth.

Calling Xiaomi, the “most successful EV startup to date,” the analysts at Bernstein cited strong early demand for its debut model SU7, a record production ramp-up, and solid gross margins of 20.4%.

Bernstein expects Xiaomi to deliver about 405,000 EVs this year, ahead of the company’s guidance of around 350,000, and projects volumes could reach 3.5 million units by 2035, positioning Xiaomi among the top 10 global automakers.

“We think Xiaomi has a unique ecosystem and significant potential to be a top contender in the global EV race, which should be a main driver of the equity story,” Bernstein wrote, noting that the next model, the YU7, due in mid-2025, could serve as a positive catalyst for the stock.

Beyond EVs, Bernstein pointed to Xiaomi’s expanding premium smartphone and IoT (Internet of Things) portfolio and a growing Internet Services segment that now contributes more than half of company profits.

Bernstein also emphasized Xiaomi’s “unique synergistic ecosystem,” driven by loyal “Mi Fans,” personalization enabled by device interconnectivity, and overseas growth in home appliances. The company currently has minimal exposure to the U.S. market.

The HK$55 target price implies about 27% upside from current levels, based on a sum-of-the-parts valuation.