Li Auto Inc. LI reported late Monday a strong year-over-year increase in January deliveries.
The Li Auto Analyst: BofA Securities analyst Ming Hsun Lee maintained a Buy rating on Li Auto with a $42 price target.
The Li Auto Thesis: Li Auto delivered 5,400 units of Li ONE, its lone EV model, representing a 356% year-over-year increase but a 12% month-over-month drop, Hsun Lee said in a Tuesday note.
The number made up about 42% of BofA's first-quarter volume sales forecast, the analyst said.
The company also announced the establishment of a new R&D center in Shanghai focused on EV technology development, including high-voltage platforms, ultra-fast charging technologies, autonomous driving, next generation intelligent cockpits, operating system and computing platforms, he said.
The new R&D center, the company said, will have end-to-end development capabilities for new models.
Related Link: 4 Reasons Why Li Auto Is Poised For 48% Compounded Annual Growth Over By 2025
"We maintain Buy on Li Auto as we expect its rapidly expanding POS (Point of Sales) to drive volume sales growth," Hsun Lee said.
BofA forecasted compounded annual growth rate of 48% in sales volume over 2020-2025, thanks to rising EV penetration; robust demand for the luxury/premium segment; a solid new model pipeline; and fast point of sales expansion.
Li Auto's extended range EV is a practical solution to mitigate consumers' concern about range anxiety, creating demand in China's EV market, the analyst said.
LI Price Action: Notwithstanding the stellar numbers, Li Auto shares lost 5.74% Tuesday, closing at $30.20.
Related Link: Nio January Deliveries Rise 352% YoY, Sequential Growth Slows
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