Li Auto price target raised to $74 from $63 at Morgan Stanley

Morgan Stanley raised the firm’s price target on Li Auto to $74 from $63 and keeps an Overweight rating on the shares. The firm is lifting total sales volume in 2024/2025 by 12%/8%, reflecting stronger-than-expected demand from new models. However, Morgan is more conservative on volume growth for 2024 vs. company guidance of 800k units in light of a challenging macro outlook and increasing sector competition. On the bright side, it increased its vehicle gross margin forecast by 1pt to factor in better scale benefit and cost control. This, together with further operating leverage, leads to a 41%/34% earnings upgrade for 2024/2025, respectively.