Since going public on the Nasdaq in July last year, the market has been kind to Li Auto (LI). Since the listing, shares of the Chinese EV maker have climbed by 93%. However, when comparing the impressive share haul to the market moves made by some of its domestic and international competitors (Nio, XPeng, Tesla), Li is actually a bit of a laggard.
The company is also behind in the development of its ADAS (advanced drive assist systems) capabilities. In fact, it doesn’t even have a full EV offering yet, as it currently only has a hybrid EREV (extended range electric vehicle) SUV – the 6-seater Li ONE – for sale.
These last two reasons are why Deutsche Bank analyst Edison Yu advises investors to stay on the sidelines with LI. While Yu awaits “more clarity on its BEV and autonomous driving roadmap,” the analyst actually has good things to say about the company.
So far, Li’s decision to go down a different route to its peers has paid off. The Li ONE’s “attractive value proposition” has resulted in excellent sales in China, where Yu thinks part of the appeal could be down to consumers’ reluctance to take the full EV route just yet.
Each quarter has also seen an increase in Li ONE deliveries.
The company already announced 4Q deliveries reached 14,500, beating its guidance for 11,000 to 12,000 deliveries, and a big improvement on the third quarter’s 8,700 deliveries. Even with fewer stores and a smaller social media following, Li actually outsold XPeng, which leads Yu to believe “LI has been laser focused on operational efficiency from early on.”
The company is also well aware it needs to eventually offer better vehicle autonomy and a 100% EV vehicle and is “likely accelerating internal developmental efforts on these fronts.”
However, a fully electric vehicle could still be 24-36 months away, and Li has also yet to “prove it can roll out in-house capabilities in ADAS/AD.”
Based on all of the above, Yu has a Hold rating on LI shares, while his $35 price target implies a ~14% upside from current levels. (To watch Yu’s track record, click here)
So, that’s Deutsche Bank’s view. The rest of the Street, on the other hand, appears to have no such worries. Barring one more Hold, all 6 other reviews say Buy, coalescing to a Strong Buy consensus rating. The average price target is a confident one and, at $43.64, suggests upside of 42% over the next 12 months. (See LI stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.