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On Sunday, Nomura analysts revised their stance on Li Auto stock, downgrading the company’s rating from Buy to Neutral. Despite the downgrade, the price target was increased from $27.00 to $31.00. According to InvestingPro data, Li Auto maintains a "GREAT" financial health score, with strong fundamentals and appears undervalued based on its Fair Value analysis. The adjustment in rating and target price reflects a cautious outlook on the near-term performance of Li Auto, amidst the anticipation of new vehicle launches.
Nomura’s analysts cited several reasons for the revised rating. They pointed to uncertainties surrounding near-term shipments, particularly in light of the upcoming launch of Li Auto’s smart driving L-series facelift models in May 2025 and two battery electric vehicle (BEV) SUV models slated for release in July and late 2025. These launches are seen as key drivers for the company’s growth in 2026, suggesting a strategic preparation period in the near term. InvestingPro data shows Li Auto holds more cash than debt and maintains strong liquidity ratios, providing financial flexibility for these launches.
The forecast for Li Auto’s unit shipments in 2025 stands at 613.5k, marking a year-over-year increase of 23%. However, Nomura has reduced its revenue projections for the fiscal years 2025 and 2026 by 16% and 15%, respectively. The company currently maintains a healthy gross profit margin of 20.53%, though vehicle gross profit margin (GPM) estimates have been trimmed by 0.2 percentage points for 2025 and 1.2 percentage points for 2026. Get deeper insights into Li Auto’s financial metrics and access the comprehensive Pro Research Report covering 1,400+ top stocks through InvestingPro.
Despite the near-term concerns, Nomura expects Li Auto to achieve a 21% revenue compound annual growth rate (CAGR) and a 23% earnings CAGR from 2024 to 2027. The raised discount cash flow (DCF)-based target price to $31 reflects this growth potential.
The analysts anticipate an improvement in sales and margins after the first quarter of 2025. However, they believe that more significant growth opportunities for Li Auto will likely materialize in 2026, following the introduction of new models in the second half of 2025.
In other recent news, Li Auto Inc (NASDAQ:LI). reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings reaching 3.79 yuan per American depositary share, compared to the consensus estimate of 3.48 yuan. The company’s revenue for the quarter increased by 6.1% year-over-year to 44.27 billion yuan ($6.1 billion), slightly surpassing the anticipated 44.21 billion yuan. Despite this, Li Auto’s first-quarter revenue guidance of 23.4 billion yuan to 24.7 billion yuan fell short of analyst predictions, indicating a year-over-year decrease of 8.7% to 3.5%. Vehicle deliveries in the fourth quarter rose 20% year-over-year to 158,696 units, though they missed the forecasted 164,919 units. For the upcoming first quarter of 2025, the company projects deliveries between 88,000 and 93,000 vehicles, marking a 9.5% to 15.7% increase from the previous year. Li Auto’s gross margin decreased to 20.3% from 23.5% a year earlier, and free cash flow saw a 59% year-over-year decline to 6.06 billion yuan. The company reported full-year 2024 revenues of 144.5 billion yuan, a 16.6% increase year-over-year, but net income dropped 31.9% to 8.0 billion yuan.
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