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On Tuesday, BOCI Research began coverage on Hesai Group (NASDAQ:HSAI) shares, assigning a Buy rating and setting a price target of $23.00. The firm’s research highlights Hesai’s leadership in the global LiDAR market and its comprehensive product range. The stock, currently trading at $18.18, has shown remarkable momentum with a 324% return over the past year. According to InvestingPro analysis, the company maintains a strong financial position with a current ratio of 3.08, indicating robust liquidity. BOCI Research anticipates that Hesai will greatly benefit from the ongoing shift in China’s automotive industry from Level 2 to Level 3 automation, which demands higher safety standards for Advanced Driver Assistance Systems (ADAS).
According to the research firm, Hesai is well-positioned for significant profitable growth starting in 2025, leveraging its dual product strategy that focuses on both ultimate performance and value-to-cost. The company’s innovative approach to chip-based vertical integration and in-house manufacturing capabilities are also seen as key advantages. While InvestingPro data shows the company is not currently profitable, with an EBITDA of -$51.81M, it maintains a healthy balance sheet with more cash than debt. For deeper insights into Hesai’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
BOCI Research pointed out that Hesai’s current market valuation, with a 2025E Price-to-Sales (P/S) ratio of 4.6 times, is lower than its direct competitor RoboSense, which has a P/S ratio of 5.9 times. The firm believes that this valuation gap does not reflect Hesai’s superior performance in market position, customer base, order intake, and profitability. However, InvestingPro’s Fair Value analysis suggests the stock is currently trading above its intrinsic value, with multiple InvestingPro Tips available for subscribers to make more informed investment decisions.
The analyst’s statement underscores the potential for Hesai’s stock, noting, "We expect Hesai is poised for a robust profitable growth from 2025 onwards by virtue of its distinct dual product roadmap of ultimate performance and ultimate value-to-cost, the innovative chip-based vertical integration as well as in-house manufacturing capabilities." The company has demonstrated strong market performance, with InvestingPro data showing a significant 381% return over the past six months.
In setting the $23.00 price target, BOCI Research applied a 6x multiple to the company’s projected 2025 sales, indicating confidence in Hesai’s growth trajectory and market prospects. The initiation of coverage with a Buy rating reflects the research firm’s optimistic outlook for Hesai Group’s future performance.
In other recent news, Hesai Group has been under the financial analysts’ radar, with Goldman Sachs and Morgan Stanley (NYSE:MS) offering contrasting assessments. Goldman Sachs upgraded Hesai’s stock rating from Neutral to Buy, citing a positive outlook on the company’s growth prospects, including a predicted 35% upside potential. The analyst firm anticipates Hesai’s next-generation ATX product to accelerate revenue growth and predicts a significant non-GAAP net profit compound annual growth rate of over 381% between 2024 and 2026.
On the contrary, Morgan Stanley downgraded Hesai’s stock rating from Overweight to Equalweight due to valuation concerns, despite significantly raising the price target. The firm’s analysis suggests limited scope for additional valuation multiple expansion, indicating the stock may now be fairly valued.
In addition, Hesai announced a significant milestone of delivering over 100,000 lidar units in December, highlighting its growing presence in the automotive sensor market. The company also shared ambitious future production goals, anticipating its annual production capacity to surpass 2 million units by 2025.
During a recent Q&A, CEO David Li emphasized the company’s projection of full-year profitability on a non-GAAP basis for 2024, while CFO Andrew Fan expressed optimism regarding business opportunities in the evolving autonomous mobility sector. These are the latest developments in Hesai’s journey in the automotive LiDAR industry.
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