{{0|Morgan Stanley} reiterated an Overweight rating on Li Auto (NASDAQ:LI) with a 12-month price target of $53.00 on the stock after checks suggest the Chinese automaker’s store traffic remains steady.
Li Auto's ADR took a 6% hit yesterday, not doing as well as its peers. NIO was down by -2%, and XPeng managed a small gain of +0.2%. This weaker performance could be due to worries surrounding increased competition in the premium SUV market, especially in the EREV space, as we move into the fourth quarter.
The analysts wrote in a note, “Overnight correction in Li Auto's share price is likely due to concerns over looming competition from peers’ new launches; we think the stock is especially vulnerable given its 95% rally YTD. Yet our checks suggest Li Auto's store traffic remains steady and order intake edged higher in August.”
Channel checks at key stores suggest Li Auto's total orders in August surpassed 36,000 units, marking a new record as the company continued its rapid expansion in retail locations, adding 9 stores compared to the previous month.
Conversations with sales staff highlight that the increase in sales primarily stemmed from the L9 model, thanks to the successful launch of the L9 Pro in early August, which saw a substantial month-over-month growth rate in the high-teens. In contrast, although the L7 model slowed down somewhat, it still accounted for 40% of the total orders.
Shares of LI are up 0.65% in early trading Wednesday morning.