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 7 months ago and has since seen an incredible surge in investor confidence. The stock has gained 54% since its listing on the NASDAQ. The Q4 earnings saw Li Auto set a new record for quarterly deliveries, with 14,464 vehicles being sold . In addition, the company also noted a 65% quarter on quarter increase in revenue. These positive results have bolstered Li Autos sentiment on Wallstreet. With so many questions to be answered on Li Auto and its future, this article will breakdown everything investors need to know about the Li Auto’s 2022 stock forecast.
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What are analysts saying about Li Auto stock?
The 12 month price targets from larger institutions include coverage from Bank of America, Morgan Stanley, Goldman Sachs and Deutsche Bank. The more recent price targets include coverage from analyst Fei Fang at Goldman Sachs, who set the 12 month price target to an impressive $60 a share and set a conviction buy rating. Across the board of 11 Wallstreet analysts the average 12 month price target is $38.52 a share. This suggests an average upside potential of 52% according to analysts. The more recent targets from these institutions on Li Auto is listed below:
- Needham & Company 3/17/2021 – analysts initiated coverage with a 12 month price target at $37 a share and a buy rating. This is an upside of 49% from the current trading price. The target was released after a gradual sell-off across the EV sector, with many Chinese EV stocks falling below expected values.
- Morgan Stanely 1/28/2021 – analysts boosted their 12 month price target from $26 to $49 a share. This suggests an upside potential of 96% from the current trading price. The analysts have also listed an overweight rating on Li Auto, suggesting the Morgan Stanley is confident LI will outperform within the EV sector.
- Bank of America 1/6/2021 – analyst Ming Hsun Lee at BoA listed a buy rating and set the 12 month price target at $42.00 a share.
- The Goldman Sachs Group 12/1/2020 – listed an conviction buy rating on Li Auto and set the price target from $20.60 to $60 a share (45% upside potential at the time of coverage). The price target impact on this coverage was high and saw Li Auto surge after the release.
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 2022. The general consensus amongst “smart money” institutions is bullish, with the average 12 month price target far exceeding the current trading price. In comparison to its industry competitors in China, NIO’s average PT suggests a 20% upside whilst Xpeng holds a 47% upside. From the targets alone, Li Auto holds the greatest upside according to analysts price target averages.
Revenue forecasts for 2022 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 increase to $2.96B Billion USD. This would represent a 100% increase in its revenue performance for 2020. Furthermore, more bullish analysts suggest revenue could reach as high as $3.56 Billion USD in 2021 if strong delivery expectations can be met. In addition, Li Autos deliveries are showing consistent growth with the Q3 deliveries at 8,660 and 14,464 vehicles in Q4. The Vehicle margin has also improved to 19.8% in the Q3. However this since dropped to 17% for Q4. We will update this data for investors once the Q1 2021 results are released to the public.
“Against the backdrop of a once-in-a-century shift in the automotive industry to smart electric vehicles, the fourth quarter capped off a year of significant growth for our company. We delivered 14,464 Li ONEs during the quarter, up 67.0% on a quarter-over-quarter basis. With 32,624 vehicles delivered to our users in 2020, Li ONE became the best-selling new energy SUV of the year in China. This outstanding performance was fueled by strong demand driven by our distinctive product offering and superior user experience, and made possible by our focused product strategy and our ability to rapidly scale up a consistent and high-quality manufacturing process, a critical pillar of our business.Mr. Xiang Li, founder, chairman, and chief executive officer of Li Auto,
The institutions are backing Li Auto and its 2022 forecasts
Firstly, 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. Hence, 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 has provided investors an opportunity to enter the growing EV market in China. Furthermore, the sentiment from analysts remains bullish, especially considering the more recent buy ratings from Morgan Stanley and BoA. In addition, the substantial growth in deliveries is another positive sign. Lastly, many EV companies are valued at a similar market cap and are yet to commercialise a single unit.
Written by Tyger Fitzpatrick
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.
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