Investing.com -- Li Auto Inc (HK:2015) (NASDAQ:LI) stock received downgrades at investment banks Nomura and Macquarie, with both firms raising concerns about the automaker's near-term growth prospects following its latest financial results and guidance.
The company's Hong Kong-listed shares slumped more than 7% on Monday.
Nomura lifted its price target to $31 but downgraded Li Auto stock to Neutral from Buy, citing uncertainties in near-term shipments and a vague outlook for 2025, although it acknowledged that efforts seem to be paving the way for growth in 2026.
Nomura analysts highlighted that Li Auto's Q4 gross profit margin (GPM) for vehicles at 19.7% fell short of market expectations.
The miss was attributed in part to “more contribution from the L6, one-off loss on MEGA purchase commitment and increased promotional costs due to competition.”
With the anticipated launch of the i8 and i6 models in the second half of 2025, Nomura predicts only a minor contribution from these models for the year, but a potential acceleration of growth into the following year.
“ We do expect sales/margins to improve sequentially post 1Q25, but believe more meaningful growth opportunities are likely in 2026F with new models launching into 2H25,” the analysts said.
They also noted Li Auto's active development of advanced driver-assistance systems (ADAS) and its plans for overseas market expansion as potential long-term growth catalysts.
Meanwhile, Macquarie echoed concerns about Li Auto's future growth beyond its current niche in premium EREVs, downgrading Li Auto shares to Neutral from Outperform.
The firm trimmed its fiscal year 2025 and 2026 volume estimates by 8% and 6%, respectively, due to weaker first-quarter guidance and fewer BEV model launches than expected. It also lowered its adjusted earnings per share (EPS) forecasts for the same periods by 31% and 13%.
“An unexciting result which raises concerns about how the company can sustain future growth beyond its profitable niche in premium EREVs,” Macquarie analysts noted.
“Outside of a stellar launch of the upcoming i8/i6, it remains difficult for investors to assign any higher multiple to Li Auto without announcing more new models beyond the planned BEV/EREV SUVs.”
The Beijing-based carmaker reported a 38% decline in net profit for the final quarter of 2024. Vehicle deliveries for the quarter rose 20% year-over-year.
Looking ahead, Li Auto forecasts first-quarter deliveries between 88,000 and 93,000 vehicles, with projected revenue of 23.4 billion to 24.7 billion yuan (approximately $3.23 billion to $3.41 billion), reflecting a 3.5% to 8.7% decline from the prior year.
