Stock Analysis

Party Time: Brokers Just Made Major Increases To Their Li Auto Inc. (NASDAQ:LI) Earnings Forecasts

NasdaqGS:LI
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Celebrations may be in order for Li Auto Inc. (NASDAQ:LI) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.

Following the upgrade, the current consensus from Li Auto's 31 analysts is for revenues of CN¥120b in 2023 which - if met - would reflect a substantial 61% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 249% to CN¥6.55. Prior to this update, the analysts had been forecasting revenues of CN¥105b and earnings per share (EPS) of CN¥3.16 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

See our latest analysis for Li Auto

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NasdaqGS:LI Earnings and Revenue Growth August 9th 2023

With these upgrades, we're not surprised to see that the analysts have lifted their price target 8.9% to US$46.68 per share.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Li Auto's rate of growth is expected to accelerate meaningfully, with the forecast 159% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 71% p.a. over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 18% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Li Auto to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Li Auto.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Li Auto going out to 2025, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether Li Auto is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.