Leading Chinese EV (Electric Vehicle) manufacturer Li Auto (NASDAQ:LI) will report its first quarter financial results on May 10. Higher deliveries are likely to support its top line. However, increased expenses could continue to pressure its bottom-line results.
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While Tesla’s (NASDAQ:TSLA) price cuts in China and increased competition pose challenges, analysts expect Li Auto to deliver sales of $2.73 billion in the first quarter compared to $1.51 billion in the prior year period, reflecting higher vehicle deliveries. Meanwhile, analysts’ estimates are higher than the management’s Q1 revenue forecast of $2.53 billion to $2.68 billion.
The company announced earlier that it delivered 52,584 vehicles in the first quarter, reflecting a year-over-year increase of 65.8%. Furthermore, the delivery numbers compare favorably with the fourth quarter of 2022, where it delivered 46,319 vehicles.
Besides for higher deliveries, new model launches and the expansion of direct sales and service networks are likely to support the company’s top line.
While Li Auto’s top line is expected to increase, its bottom line could remain under pressure due to an increase in expenses to support the expansion of its product portfolio.
In addition, increased rental expenses related to the expansion of its sales and servicing network could further remain a drag.
Analysts expect Li Auto to report earnings of $0.05 a share, compared to $0.47 in Q1 of 2022.
On May 1, Morgan Stanley analyst Tim Hsiao reiterated his Buy recommendation on Li Auto stock with a price target of $30. The analyst remains impressed with the continued strength in deliveries. Further, the analyst is upbeat about the company’s current valuation, strong balance sheet, and innovation.
What is the Price Target for Li Auto?
Analysts remain upbeat about Li Auto stock ahead of Q1 earnings. Li Auto stock sports a Strong Buy consensus rating based on five unanimous Buy recommendations. Analysts’ average price target of $37.30 implies 50.71% upside potential.
