The new age Chinese Electric Vehicle trio NIO, Xpeng and Li Auto have made their presence felt in the US markets. Li Auto Inc. (NASDAQ: LI) debuted on Wallstreet less than 4 months ago and has since seen an incredible surge in investor cofindence. The stock has gained 90% since its listing on the NASDAQ. The earnings call on Friday was bitter sweet for investors, with delivery of Electric vehicles up four fold since Q1 2020 however posting a net loss up 42% compared to Q2 2020. With so many questions to be answered with Li Auto, this article will breakdown everything investors need to know about Li Auto 2021 forecasts.
Table of contents
What are analysts saying about Li Auto stock?
The 12 month price targets from larger institutions include coverage from CitiGroup, Morgan Stanley, Goldman Sachs and Sanford C. Bernstein. The most up to date price target was from Citigroup, who set the 12 month price target to $27 a share and a neutral rating. The list of coverage from these institutions on Li Auto is listed below:
- Smith Barney CitiGroup 11/4/2020 – listed an initial coverage with a neutral rating and a 12 month price target set at $27 a share. Impact on the stock price was high.
- Morgan Stanley 8/24/2020 – listed an overweight rating on Li Auto and set the price target at $20 (33% upside potential at the time of coverage). The price target impact on this coverage was high and saw Li Auto surge after the release.
- Goldman Sachs 8/23/2020 – listed a buy rating for the stock which had high impact on the stock price.
What these 12 month forecasts mean for investors?
In summary, the data provided by direct institutional coverage of Li Auto does hint a positive sentiment moving into 2021. It is important to note the institutional analysts are generally more conservative regarding 12 month targets they provide in their research. Institutional analysts sway towards a Hold rating at the current trading price.
Revenue forecasts for 2021 and beyond
The revenue forecasts for 2021 and beyond look extremely positive. Firstly, the large margin for growth in the Chinese EV space has driven the demand for Li Auto deliveries. The revenue forecast for 2021 is expected to be $2.58 Billion USD which would double its expected revenue for 2020. Analysts suggest revenue could reach as high as $3 Billion USD in 2021. The deliveries are showing consistent growth with the Q3 deliveries at 8,660, a 31% increase from last quarter. The Vehicle margin also saw an increase in mark up to 19.8% from 13.7% in the previous quarter. The guidance from the companies earnings report states they forecast a 50% increase in deliveries by Q4 2020.
We delivered 8,660 Li ONEs in the third quarter, representing a 31.1% quarter-over-quarter increase and setting a new quarterly record. Cumulative deliveries in 2020 at the end of October reached 21,852 vehicles. This is a strong testament to the competitiveness of the Li ONE. For the fourth quarter of 2020, we expect our growth momentum to continue with deliveries reaching 11,000 to 12,000 vehicles.”Mr. Xiang Li, founder, chairman and chief executive officer of Li Auto
The institutions are backing Li Auto and its 2021 forecasts
There are some very large institutions that have taken a piece of the pie from Li Auto holdings. Large institutions which have stake in the Chinese EV manufacturer include UBS Asset management, Morgan Stanley, BlackRock and JP Morgan & Chase. The largest institutional stakeholder is UBS Asset Management who currently have $103.69M or 12.55% stake in Li Auto. Closely following is Morgan Stanley with $95.90M stake or 11.6% stake in the company. Investors should pay close attention to changes in quarterly holdings from these institutions. Large swings in these holdings can give investors a good understanding into how these analysts are viewing the outlook on the company.
Evaluating Li Auto’s stock forecast moving into 2021
I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, Li Auto alike its counterparts NIO and Xpeng have provided a new EV market for US investors to invest in offshore. The sentiment from analysts remains strong however the lack of institutional analyst coverage does suggest the current price may be overvalued. The fast growth in deliveries quarter on quarter is extremely positive as many EV companies are valued at a similar market cap and are yet to commercialise a single unit. The large holdings from insititutions does offer exposure to the everyday investor. This can occur when the larger stakeholders sell a significant amount of shares. If monitored correctly and an actioned at a lower entry price, Li Auto does translate some strong growth opportunities (opinion not advice).
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.