On Monday, Morgan Stanley reaffirmed its positive stance on Li Auto (NASDAQ:), maintaining an Overweight rating with a $65.00 price target for the electric vehicle manufacturer’s stock. The company’s recent vehicle delivery report exceeded its own revised forecasts for the first quarter of 2024, with a total of 80,400 vehicles delivered, surpassing the guidance range of 76,000 to 78,000 units. This performance aligns closely with market expectations.
Li Auto reported a significant monthly increase in vehicle deliveries, with 28,984 vehicles delivered in March, marking a 43% rise from the previous month and a 39% increase year-over-year. This growth comes as the company continues to expand its retail presence, boasting 474 retail stores across 142 cities as of March 31, 2024. Li Auto aims to nearly double this number to 800 stores by the end of the year.
The focus for Li Auto is now turning to its upcoming models, with the L6 and the new Air series expected to garner considerable attention. The Air version, in particular, is anticipated to attract customers with its value proposition, especially those who are not specifically looking for air suspension features. The new Air version is scheduled to start deliveries in May, which could potentially drive a stronger sales momentum going into the second quarter.
Morgan Stanley’s commentary highlighted the potential impact of the new Air version on the sales mix of Li Auto’s L series, which includes the Ultra, Max, and Pro models. The firm will closely observe whether the introduction of the Air version can enhance the overall order intake for the L series.
The analyst’s outlook for Li Auto is optimistic, with expectations of increased sales driven by the launch of the L6 model and the new Air series, as well as the company’s ongoing retail expansion. These factors are likely to contribute to a more robust sales performance in the second half of the year.
InvestingPro Insights
Li Auto’s recent achievements and Morgan Stanley’s positive outlook are further supported by key metrics and insights from InvestingPro. The company holds a strong market capitalization of $31.13 billion, which underscores its significant presence in the electric vehicle industry. With a remarkable revenue growth of 173.48% over the last twelve months as of Q4 2023, Li Auto demonstrates a robust expansion trajectory that aligns with analysts’ expectations of sales growth in the current year. This growth is a testament to the company’s ability to innovate and capture market share.
InvestingPro Tips reveal that Li Auto is a prominent player in the Automobiles industry and that its valuation implies a strong free cash flow yield, which can be a compelling factor for investors seeking companies with solid financial health and potential for sustained profitability. Additionally, the company’s stock trades with high price volatility, which may present opportunities for investors with a keen eye for market movements. For more insights, consider exploring the additional 8 InvestingPro Tips available for Li Auto.
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