Jefferies has revised its stance on Li Auto (NASDAQ: LI), lowering the rating from Buy to Hold and marking down the price target sharply from $28.80 to $17.50. Presently, the stock is trading near its yearly low at $16.69, having suffered a 45% loss over the preceding six months.
Analyst Johnson Wan highlighted the increasingly fierce competition within the family SUV market segment, where Li Auto markets its electric range-extended vehicles (EREVs). Despite these mounting pressures, available InvestingPro data confirms Li Auto remains profitable with a price-to-earnings ratio of 26.51 and carries more cash than liabilities, indicating a strong financial position.
Jefferies specifically flagged the anticipated robust product lineup Huawei plans to launch in 2026 as a significant threat, potentially intensifying market challenges for Li Auto's EREV models. The firm also took note of Li Auto's initial steps into AI hardware with the release of its inaugural AI glass. However, Jefferies cautioned that broad commercialization of its AI initiatives is expected to take considerable time before driving meaningful revenue contributions.
The year 2026 is seen by Jefferies as a probable transition period for Li Auto, influenced by a relatively light product cycle and headwinds facing the electric vehicle sector generally. This outlook comes amid the company's recent mixed quarterly results, which included a disappointing forecast for the subsequent quarter. Li Auto reported delivering 33,181 vehicles in November and plans to boost monthly production capacity of its Li i6 model to 20,000 units by early next year.
Other financial institutions have also adjusted their price targets and ratings. Goldman Sachs cut its price target from $30.90 to $27.00, maintaining a Buy rating but citing increased operating expenses and recall costs as concerns. Freedom Capital Markets lowered its price target from $34.00 to $25.00 yet retains a Buy rating despite the challenging forecast.
HSBC followed suit, downgrading Li Auto to Hold with a price target adjustment to $18.60 from $30.30 due to uncertainties over 2026 and hurdles currently faced. Piper Sandler shifted its price target down to $18 while maintaining a Neutral rating, referring to the industry’s shifting policy landscape and Li Auto's gradual move to fully electric vehicles as central factors.
These developments underscore the complexity of Li Auto's present environment as it contends with intensifying competition, evolving market dynamics, and strategic transitions within the electric vehicle industry.