Li Auto Inc. LI, which is one of the three U.S.-listed Chinese EV startups, is poised to outperform in the near- to medium-term, according to an analyst at BofA Securities.
The Li Auto Analyst: Ming Hsun Lee initiated coverage of Li Auto with a Buy rating and $42 price target.
The Li Auto Thesis: Li Auto volume sales will likely grow at a compounded annual growth rate of 48% over 2020-25, helped by a quartet of factors, Hsun Lee said in a note.
- EV penetration is rising in China, with a particularly strong demand for luxury/premium vehicles.
- Li Auto has a solid model pipeline.
- Li Auto is seeing rapid expansion of its point of sales.
- Extended range EVs are seen as a solution to users' concern regarding range, creating a solid demand for the company's vehicles in China's EV market.
Related Link: Will Xpeng Or Li Auto Stock Grow More By 2022?
Li Auto has raised about $3.7 billion in 2020, which is sufficient to invest in tailor-made autonomous driving solutions, vehicle connectivity, and BEV/charging technology to improve user experience further, Hsun Lee said. This will help the company increase its market share from 3% in 2020 to 6% in 2023.
BofA expects the company to launch one model a year over 2022-24, and to have a presence in the full-size and compact SUV segments. The company could turn net income and FCF positive in 2022 and 2023, respectively.
Li Auto Price Action: Li Auto shares rallied more than 6.6% on Wednesday. The stock pared some of those gains, trading around $31.35 at publication time.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
