It's been a pretty great week for Li Auto Inc. (NASDAQ:LI) shareholders, with its shares surging 14% to US$23.30 in the week since its latest quarterly results. Revenues of CN¥3.6b beat expectations by a respectable 9.3%, although statutory losses per share increased. Li Auto lost CN¥0.41, which was 131% more than what the analysts had included in their models. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Li Auto after the latest results.
Taking into account the latest results, the current consensus from Li Auto's 14 analysts is for revenues of CN¥19.0b in 2021, which would reflect a huge 56% increase on its sales over the past 12 months. The loss per share is expected to greatly reduce in the near future, narrowing 57% to CN¥0.62. Yet prior to the latest earnings, the analysts had been forecasting revenues of CN¥18.7b and losses of CN¥0.39 per share in 2021. While this year's revenue estimates held steady, there was also a massive increase in loss per share expectations, suggesting the consensus has a bit of a mixed view on the stock.
The consensus price target fell 5.2% to US$37.79per share, with the analysts clearly concerned by ballooning losses. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Li Auto analyst has a price target of US$60.00 per share, while the most pessimistic values it at US$27.00. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Li Auto's revenue growth will slow down substantially, with revenues to the end of 2021 expected to display 81% growth on an annualised basis. This is compared to a historical growth rate of 972% over the past year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 22% per year. So it's pretty clear that, while Li Auto's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most important thing to note is the forecast of increased losses next year, suggesting all may not be well at Li Auto. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Li Auto's future valuation.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Li Auto going out to 2025, and you can see them free on our platform here.
Even so, be aware that Li Auto is showing 1 warning sign in our investment analysis , you should know about...
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