Morgan Stanley reiterated an Obese score and $40.00 worth goal on Li Auto (NASDAQ:) after conducting retailer checks and talking with salespeople.

In keeping with Morgan Stanley’s newest retailer checks, Li Auto’s total foot visitors in flagship areas in Tier 1 cities improved 16% MoM to a document YTD quantity in Could. The electrical automaker’s L7/L8 continues to achieve traction, regardless of friends’ aggressive mannequin launches, driving clients to take a better take a look at Li Auto’s fashions for comparability.

In Could, the corporate’s retail conversion charge (the ratio of order consumption to foot visitors) remained spectacular at 8%, surpassing Li Auto’s historic common of 5-6% in 2022 and the trade common of 4-5%. The elevated conversion charge was probably pushed by profitable check drives/rides of the L7 Air and L8 Air fashions, in addition to the corporate’s distinct product positioning. These fashions particularly focused households and exhibited distinctive worth efficiency in comparison with competing fashions from different firms.

Primarily based on Morgan Stanley’s chats with retailer salespeople, all of the fashions noticed a stable improve in Could. The L7 mannequin was the preferred, making up 40-50% of whole orders, adopted by the L8 and L9 fashions, which every accounted for 25% of orders. The Li One additionally had double-digit progress in Could as the corporate labored on promoting off stock. A few of the salespeople even recommended that Li Auto’s total orders might attain round 30,000 items in Could as they expanded their gross sales channels.

Analysts wrote in a word, “With adequate order e book and rising retailer footprints, the founding father of Li Auto continues to focus on 30k gross sales in June. Together with stable April and Could gross sales, Li Auto is poised to beat the excessive finish of 2Q steerage (76-81k) by 3k if June gross sales can attain 30k as guided, and underpins the corporate’s 40k month-to-month in late 2H.”

Shares of LI are up 1.91% in premarket buying and selling on Wednesday.