EF Hutton Says Buy Xpel inc. (XPEL), 'Stock Down on Tesla News', 'could achieve a 12% pre-load rate of PPF on new Rivians'
EF Hutton analyst Tim Moore reiterated a Buy rating and $104.00 price target on Xpel inc. (NASDAQ: XPEL).
The analyst comments " We believe that XPEL's current relationship with Tesla will be maintained for volumes into late 2024 and the worst case scenario could be the loss of 7% of total sales for XPEL afterwards. However, in our view, we do not expect this worst case scenario to occur because it is more challenging to install color tints (black, red, blue, green, gold) than a clear film. Being off even 1/16th of an inch on the edges could show color differences or jam the doors. For example, installing a red tint over a white exterior might not exactly cover the white door sides or the bottom of the bumpers. It could create an unwanted contrast look compared to a clear cover. We remind investors that XPEL does offer some colored films, but the majority of its PPF revenues come from clear films. XPEL is positioned to expand more into colored films if the OEMs ask for it and negotiate. Our initial understanding is that Tesla might charge $7,500-$8,000 for a full wrap, which is higher than our channel checks of $5,000-6,000 for a clear wrap of XPEL's product at authorized installers. Lastly, we remind investors that XPEL is ramping up its exclusive onsite installations at the Rivian Automotive (RIVN; not rated) plant. We believe those revenues could reach $20 million next year for XPEL compared to possibly $30 million from Tesla this year. The current Consensus sales estimate for Rivian next year is $6.9 billion. If we assume the average selling price of a Rivian is $85,000, that equates to roughly 80,000 volume production for 2024. If we assume XPEL could achieve a 12% pre-load rate of PPF on new Rivians, that could equate to 9,500 units and possibly $20 million revenues next year for XPEL. Assuming that the Rivian wrap mix is mostly full front coverage and not the full truck."
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Shares of Xpel inc. closed at $76.71 yesterday.