Li Auto is tagged with a higher rating at Macquarie than NIO and XPeng

Macquarie initiated coverage on Li Auto (NASDAQ:LI) on Monday with an Outperform rating, setting the Chinese EV stock a notch above the Neutral ratings fired off on XPeng (XPEV) and NIO (NIO).

Analyst Eugene Hsiao thinks Li Auto (LI) is poised to achieve more than one million in unit sales by FY26 as it stands out in the sector as a range anxiety winner. The firm's bullish thesis on Li Auto (LI) is that it stands alone in the wave of new Chinese EV players due to having the highest volumes, vehicle margins, and cash generation among peers. Hsiao noted that the company's user-first strategy appears to be working, as demand for high-end EREVs and BEVs continues to outpace the broad market. Notably, Li Auto (LI) is expected to be a beneficiary of continuing demand for hybrid-type EV power trains, which the firm anticipates will continue to see improving market share gains in the next few years.

The firm assigned a price target of $40 to Li Auto (LI) to represent more than 30% upside from the current trading price. The price target works out to 1.7X Macquarie's FY24 price-to-sales estimate for Li Auto (LI). Shares of Li Auto (LI) dipped 1.05% in morning trading to $29.08 vs. the 52-week range of $21.48 to $47.33. Short interest on the EV stock stands at just 3.2% of the total float. The Seeking Alpha Quant Rating on Li Auto (LI) is flashing Buy.