Goldman Sachs Bullish On Li Auto Goldman Sachs Forecasts 50%+ Upside for Li Auto (NASDAQ:LI)

By: Alex Freidmen

Goldman Sachs placed its bets on Li Auto Inc LI, anticipating a remarkable 50% surge in its stock value.

Analyst Tina Hou initiated coverage on Li Auto with a Buy rating and a price target of $52.90, indicating a potential 52.9% upside over the next year for this Chinese electric vehicle (EV) manufacturer.

Growth Drivers

Li Auto is poised for a robust growth phase, demonstrated by surging 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.

Li Auto, holding 5% of the new energy vehicle (NEV) market share in China, distinguished itself as one of the few profitable EV players in the country. Its innovative approach, integrating a fuel tank to charge the battery and extend driving range, has captivated the rapidly expanding Chinese electric car market, competing with established brands such as BYD Co Ltd BYDDF, Tesla Inc TSLA, XPeng Inc – ADR XPEV, and NIO Inc – ADR NIO.

Also Read: EV Showdown 2024: Tesla, BYD, NIO, XPeng, Li – Which Offers Greater Value?

Catalysts Driving LI Stock

Several catalysts are fueling the positive outlook, including:

  • Upcoming model launches
  • Advancements in its advanced assisted-driving system (City NOA program)
  • 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 bolstering investor confidence.

The company’s ambitious plans to unveil multiple new models in 2024, culminating 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 poised for accelerated growth.

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Potential Risks

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 booming EV market. Investors eyeing substantial growth opportunities in the EV sector might find Li Auto a compelling addition to their portfolio.

Now Read: Tesla ‘Is The Only Investable’ EV Play, Says Analyst, As Electric Vehicle Industry Navigates A Tough 2023: Year In Review

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