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On Tuesday, Goldman Sachs analyst Tina Hou upgraded Hesai Group (NASDAQ:HSAI) stock from Neutral to Buy, setting a price target of $18.40. The upgrade reflects a positive outlook on the company's growth prospects, with an anticipated 35% upside potential.
Hesai, a leader in the LiDAR industry, is expected to benefit from the increased adoption of navigation on autopilot (NOA) technologies starting from the year 2025. This trend, coupled with the introduction of more affordable LiDAR products, is predicted to expand LiDAR usage across mass-market vehicle models.
Goldman Sachs anticipates Hesai will enter a fruitful phase with its next-generation ATX product, which is forecasted to have a three-year product cycle beginning in 2025. This new product cycle is projected to accelerate the company's revenue growth and enable it to achieve a significant non-GAAP net profit compound annual growth rate (CAGR) of over 381% between 2024 and 2026.
The firm's analysis suggests that Hesai's financial performance will outperform market expectations. Goldman Sachs' non-GAAP net profit estimates for 2025 and 2026 are 11% and 18% higher, respectively, than the Bloomberg consensus. The firm believes that the market has not yet fully recognized the operational leverage that Hesai will gain from its new product cycle.
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