Bank of America Securities: Downgrades Li Auto-W rating to "Neutral" with a target price reduced to HKD 101
Bank of America Securities released a research report stating that it has downgraded the rating of Li Auto-W from "Buy" to "Neutral" due to the company's forecast of declining sales and gross margin in its second-quarter earnings report. Management estimates third-quarter deliveries to be between 90,000 and 95,000 units, a year-on-year decrease of 38% to 41%, with a gross margin of 19%. Bank of America Securities has lowered the target prices for Li Auto's U.S. ADR and Hong Kong stock from $31 and HKD 121 to $26 and HKD 101, primarily based on revised sales and free cash flow expectations. The firm believes the latest guidance reflects intensified market competition, which will weigh on Li Auto's sales growth prospects. Bank of America Securities has reduced its expected sales for Li Auto for the fiscal years 2025 to 2027 by 12%, 12%, and 8%, respectively, and has increased the operating expense as a percentage of sales by 2.1, 2.1, and 1.5 percentage points, respectively, while lowering its non-GAAP earnings expectations by 38%, 33%, and 31%
According to the Zhitong Finance APP, Bank of America Securities has released a research report stating that it has downgraded the rating of Li Auto-W (02015) from "Buy" to "Neutral," as the company forecasted a decline in third-quarter sales and gross margin in its second-quarter financial report. Management estimates third-quarter deliveries to be between 90,000 and 95,000 units, a year-on-year decrease of 38% to 41%, with a gross margin of 19%. Bank of America Securities has lowered the target prices for Li Auto's U.S. ADR (LI.US) and Hong Kong stock to $26 and HKD 101, respectively, from $31 and HKD 121, mainly based on revised sales and free cash flow expectations.
The firm believes the latest guidance reflects intensified market competition, which will weigh on Li Auto's sales growth prospects. Bank of America Securities has lowered its expected sales for Li Auto for the fiscal years 2025 to 2027 by 12%, 12%, and 8%, respectively, and has raised the operating expense as a percentage of sales by 2.1, 2.1, and 1.5 percentage points, respectively, while lowering its non-GAAP profit expectations by 38%, 33%, and 31%
