TSX runs higher on rate cut expectations
Investing.com - BofA Securities downgraded Li Auto (NASDAQ:LI) from Buy to Neutral and lowered its price target to $26.00 from $31.00 following the company’s second-quarter 2025 results. The stock, currently trading at $23.41, has seen a 26% decline over the past six months, though InvestingPro analysis suggests the company maintains a GREAT financial health score of 3.22.
The downgrade comes after Li Auto issued guidance for lower sales volume and gross profit margin in the third quarter of 2025, with expected vehicle deliveries of 90,000-95,000 units, representing a year-over-year decline of 38% to 41%.
BofA Securities analyst Ming Hsun Lee cited intensified market competition as a key factor weighing on Li Auto’s sales growth outlook, as reflected in the company’s latest guidance.
The investment bank cut its 2025, 2026, and 2027 volume sales estimates by 12%, 12%, and 8% respectively, while increasing its operating expense to sales ratio by 2.1, 2.1, and 1.5 percentage points for the same periods.
As a result of these adjustments, BofA Securities reduced its non-GAAP earnings estimates for Li Auto by 38%, 33%, and 31% for 2025, 2026, and 2027, respectively, with the price target cut primarily reflecting lowered sales and free cash flow projections.
In other recent news, Li Auto Inc . reported its Q2 2025 earnings, which fell short of analysts’ expectations. The company posted an earnings per share (EPS) of $1.37, missing the forecasted $1.81, and reported revenue of $30.24 billion, below the anticipated $33 billion. Despite these results, investor sentiment appeared positive, as reflected by the stock’s rise in pre-market trading. Barclays lowered its price target for Li Auto to $24, maintaining an Equalweight rating, due to a soft third-quarter delivery outlook of 90,000-95,000 vehicles. This represents a decline of approximately 16% from the previous quarter, even with the launch of its first battery electric vehicle SUV, the i8. Additionally, Tiger Securities adjusted its price target to $28 from $33, while maintaining a Buy rating, noting that the second-quarter results were largely in line with expectations. These developments highlight the mixed reactions from analysts and investors regarding Li Auto’s recent performance and future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.