Goldman Sachs has placed a bullish bet on Li Auto Inc, forecasting a staggering 50% surge in its stock value. Analyst Tina Hou initiated coverage of Li Auto with a Buy rating and a price target of $52.90, indicating an anticipated 52.9% upside over the next year for this prominent Chinese electric vehicle (EV) manufacturer.
Catalysts for Future Growth
Li Auto is poised for a robust growth trajectory, fueled by soaring monthly deliveries and the imminent launch of a new fully electric model. “We expect the competitive positioning of BEV [battery electric vehicle] models and deepening sales network to drive another leg of growth for Li Auto,” noted Hou.
With a 5% market share in China’s new energy vehicle (NEV) market and a profitable track record, Li Auto stands out as a leading pure NEV player. Its innovation, which incorporates a fuel tank to charge the battery and extend driving range, has captured attention in the rapidly expanding Chinese electric car market, rivalling other renowned brands like BYD Co Ltd, Tesla Inc, XPeng Inc – ADR, and NIO Inc – ADR.
Catalysts Fueling LI Stock
The positive outlook is underpinned by numerous catalysts, including upcoming model launches, advancements in its advanced assisted-driving system, and an impending quarterly earnings report due in late February. Li Auto’s announcement of the launch and delivery of its Mega multipurpose electric vehicle on March 1 is further boosting investor confidence.
Additionally, the company’s ambitious plans to unveil multiple new models in 2024, resulting in a portfolio of eight models by year-end, reinforce Goldman’s bullish stance. Moreover, with an impressive 182% year-on-year increase in car deliveries in 2023, totaling over 50,000 cars in December alone, Li Auto is positioned for accelerated growth.
Potential Risks
It’s important to note potential risks such as fluctuating market demand and intensified competition could dampen Li Auto’s prospects. Goldman’s neutral rating for Nio also reflects caution due to its decreasing market share and relatively mature product lineup. Despite these challenges, Li Auto’s aggressive expansion strategies, innovative offerings, and anticipated revenue streams from BEV models position it as a frontrunner in China’s thriving EV market. Investors eyeing substantial growth opportunities in the EV sector might find Li Auto a compelling addition to their portfolio.
