Goldman Sachs lifts Hesai stock target to $23.30, maintains buy

On Tuesday, Goldman Sachs adjusted its outlook on Hesai Group (NASDAQ:HSAI) shares, raising the price target to $23.30 from the previous $20.40, while reiterating a Buy rating on the stock. The firm’s analyst, Tina Hou, noted that Hesai’s first-quarter 2025 results were strong, with revenue meeting expectations and net profit exceeding them, primarily due to a higher gross margin and reduced operating expenses. The stock has shown remarkable momentum, delivering a 362% return over the past year and a 55% gain year-to-date, according to InvestingPro data.

Hesai’s gross margin for the quarter stood at 41.7%, which is a year-over-year increase of 3.0 percentage points and a quarter-over-quarter rise of 2.7 percentage points, surpassing Goldman Sachs’ estimate of 39.5%. This improvement was largely attributed to a boost in engineering services revenue. Operating expenses showed a year-over-year decline of 9% and were 5% lower than Goldman Sachs’ expectations. The sales and marketing, research and development, and general and administrative expenses as a ratio to revenue also saw significant decreases, indicating operational leverage from capitalizing on a new product cycle. InvestingPro analysis reveals the company maintains strong liquidity with a current ratio of 2.87 and holds more cash than debt on its balance sheet, suggesting robust financial health.

The company’s non-GAAP net profit was reported at RMB 9 billion, in contrast to the expected RMB 17 billion net loss by Goldman Sachs and a RMB 43 billion net loss according to Bloomberg Consensus. This performance was driven by the combination of higher gross profit and lower operating expenses.

Looking ahead, Hesai provided second-quarter 2025 revenue guidance that was 3% higher than Goldman Sachs’ and Visible Alpha Consensus’ previous estimates. The forecasted revenue of RMB 680 million to RMB 720 million represents a significant increase year-over-year and quarter-over-quarter. The rapid adoption of LiDAR technology in the Chinese automobile market has exceeded expectations, with premium and mass-market models incorporating LiDAR features as standard or in lower-priced segments. InvestingPro indicates strong growth potential, with analysts expecting sales growth and profitability this year. For deeper insights into Hesai’s growth trajectory and 13 additional ProTips, subscribers can access the comprehensive Pro Research Report.

In light of these market developments, Goldman Sachs has revised its estimates for automotive LiDAR volume for 2025 and 2026 upwards by 23% and 37%, respectively, to 3.5 million and 6.0 million units. This suggests an anticipated penetration of LiDAR into new energy vehicles of 25% in 2025 and 35% in 2026, up from the previous forecasts of 20% and 26%. Consequently, the firm has increased its non-GAAP net profit projections for 2025 to 2027 by 3% to 14%, leading to the updated 12-month price target that implies a 9% upside from the previous target.

In other recent news, Hesai Group has been making significant strides in the lidar technology sector. The company recently announced that its AT series lidar will be integrated into Cadillac’s new electric VISTIQ SUV, marking a notable milestone as the first in-cabin lidar deployment in the automotive industry. This innovative integration aims to enhance vehicle design and functionality while reducing the risk of sensor damage. Additionally, Hesai’s lidar technology will be a key component in Pony.ai’s new Robotaxi fleet, which plans to utilize four AT128 lidar sensors per vehicle, highlighting Hesai’s leading role in the autonomous driving industry.

Hesai also launched its new "null Eye" lidar solutions designed for various levels of autonomous driving, with products like the AT1440, ETX, and FTX targeting different applications. These advancements are part of Hesai’s strategy to strengthen its position in the advanced driver-assistance systems and autonomous driving markets. In response to these developments, Morgan Stanley (NYSE:MS) raised its price target for Hesai to $23, maintaining an Equal-weight rating, while BofA Securities adjusted its price target to $21, still recommending a Buy rating. Both firms acknowledge Hesai’s potential growth in the lidar market, driven by its new product lineup and strategic partnerships.

These recent developments underscore Hesai’s commitment to innovation and its role as a significant player in the evolving landscape of autonomous driving technology. The company’s efforts to enhance its product offerings and secure strategic collaborations are expected to bolster its market presence and drive future growth.

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