Morgan Stanley lifts Hesai stock target to $23, keeps equal-weight

On Tuesday, Morgan Stanley (NYSE:MS) increased the price target for Hesai Group (NASDAQ:HSAI) to $23 from the previous $15. The firm maintained an Equal-weight rating on the stock. The revision comes as light detection and ranging systems (LiDARs) are increasingly becoming a standard feature in advanced driver-assistance systems (ADAS) for original equipment manufacturers (OEMs) who prioritize a mix of safety and performance. The stock has shown remarkable momentum, delivering a 362% return over the past year, according to InvestingPro data.

The adjustment in Hesai’s price target reflects Morgan Stanley’s updated volume forecasts for the years 2025-26. The firm’s analysts expect that the adoption of LiDAR technology in level 2 and above (L2+) ADAS will continue to grow, which bodes well for companies like Hesai that specialize in this technology. With a strong current ratio of 2.87 and analysts forecasting 62% revenue growth, the company appears well-positioned to capitalize on this market opportunity.

Morgan Stanley’s analysts noted that Hesai’s stock is currently trading at over 30 times the consensus 2026 price-to-earnings (P/E) ratio. Given this high valuation, the analysts believe there is limited room for the stock price to rise further. Despite the raised price target, the firm’s stance remains at Equal-weight, indicating that they believe the stock is fairly valued at current levels. InvestingPro analysis suggests the stock is currently overvalued, with multiple indicators including RSI pointing to overbought conditions. Discover 15+ additional exclusive insights and detailed valuation metrics with an InvestingPro subscription.

The LiDAR technology is crucial for the development of semi-autonomous and autonomous driving systems, providing vehicles with the ability to detect and measure distance to objects in their path. As more automotive companies integrate these systems into their vehicles, suppliers like Hesai could potentially benefit from the increased demand.

The new price target of $23 represents Morgan Stanley’s updated assessment of Hesai’s growth prospects in the LiDAR market, especially considering the technology’s integration into the automotive industry’s next-generation safety and performance features.

In other recent news, Hesai Group has announced that its AT series lidar will be featured in Cadillac’s new electric VISTIQ SUV, marking a significant milestone as the first in-cabin lidar deployment in the automotive industry. This integration is part of a strategic partnership between Hesai and Cadillac to enhance the vehicle’s design and functionality. Additionally, Hesai’s technology will be integral to the first L4 autonomous Robotaxi, a collaboration with Didi Autonomous Driving and GAC Aion, which is set for mass production and deployment by 2026. Hesai has also introduced the "null Eye" lidar solution, which includes new products such as the AT1440, ETX, and FTX, aimed at improving autonomous driving capabilities from L2 to L4. These products are expected to strengthen Hesai’s position in the advanced driver-assistance systems (ADAS) and autonomous driving markets.

Furthermore, Hesai’s lidar technology will be featured in Pony.ai’s new Robotaxi fleet, which is set to be mass-produced starting in mid-2025. The collaboration between Hesai and Pony.ai highlights the company’s role as a leading lidar supplier in the autonomous driving industry. On the financial front, BofA Securities recently adjusted its price target for Hesai Group to $21.00, down from $22.00, while maintaining a Buy rating, reflecting the firm’s positive outlook on Hesai’s growth trajectory. These developments underscore Hesai’s commitment to innovation and its focus on meeting the diverse needs of the autonomous vehicle industry.

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