Shares of the Chinese vehicle maker Li Auto (NASDAQ:LI) delivered significant gains year-to-date. For instance, Li Auto stock is up about 91% so far this year. Despite this notable increase in its price, Wall Street analysts see more upside potential in the stock.
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Let’s see why.
Factors Supporting Li Auto Stock
The potential upside in Li Auto stock is supported by the company’s strong Q3 performance. The company delivered 105,108 units in the third quarter, up 296.3% year-over-year. Meanwhile, its revenue from vehicle sales jumped 271.6% to $4.61 billion. What stood out is the significant year-over-year improvement in vehicle margin, which came in at 21.2% compared to 12% in the prior-year quarter.
Following its strong Q3 performance, Barclays analyst Jiong Shao increased the price target on Li Auto stock to $50 from $48. Shao maintained a Buy rating on LI due to its solid financial performance and expects Li Auto to benefit from the planned launch of its first battery electric vehicle. Along with Shao, Bank of America Securities analyst Ming-Hsun Lee also increased the price target on Li Auto stock following Q3 performance.
Additionally, the announcement of mass production and delivery of its first electric car, Mega, in February remain catalysts. Based on Li Auto’s 800-volt BVE platform, Mega boasts a 500-kilometer driving range with a 12-minute charge. The pre-orders for Mega in China saw overwhelming demand, with 10,000 orders received within hours, according to CnEVPost. With this background, let’s look at the Street’s recommendation for LI stock.
What is the Price Target for Li Auto Stock?
Li Auto stock has received four unanimous Buy recommendations for a Strong Buy consensus rating. Moreover, the average LI stock price target of $53.75 implies an upside potential of 38.28% from current levels.
Bottom Line
Li Auto stock has gained substantially year-to-date. However, its solid Q3 performance, strong guidance, including sequential and year-over-year increases in deliveries, and the launch of a pure electric vehicle position it well to deliver strong financials ahead and will support its share price. This is reflected in analysts’ Strong Buy consensus rating and average price target.
