Key Takeaways:
(Bloomberg) -- Hesai Group’s American depositary receipts fell more than 10% after its first-quarter results, as concerns over shrinking margins and pricing pressure overshadowed a swing to profitability and strategic wins.
“The share price reaction to 1Q results, which were in line, was overdone,” Morgan Stanley analysts wrote, reiterating an Overweight rating. The bank believes the company’s full-year delivery targets and expected revenue improvements in the coming quarters remain on track.
The Shanghai-based lidar manufacturer reported net revenues of 680.6 million yuan ($98.7 million) for the first quarter, a 30% increase year-over-year. Net income reached 18.3 million yuan, a significant turnaround from a net loss of 17.5 million yuan in the same period last year, marking its fourth straight quarter of GAAP profitability. Total lidar shipments grew to 471,723 units, driven by strong demand in both the advanced driver-assistance systems (ADAS) and robotics sectors.
Despite the profit swing, investors focused on the challenges. Gross margin declined to 39.1% from 41.7% a year earlier, which the company attributed to product mix changes and pricing pressure. While several brokers maintained bullish outlooks, some trimmed their price targets. Citigroup, which kept its Buy rating, lowered its target price to $28.60 from $33, citing weaker-than-expected blended average selling prices.
Hesai management highlighted its strategic evolution from a hardware supplier to a “Spatial Intelligence” company, underscored by a partnership with Mercedes-Benz for Level 3 autonomy. The company also announced a new high-end lidar model, ETX, powered by its new “Picasso” 6D full-color SPAD-SoC. For the second quarter of 2026, Hesai guided for net revenues between 850 million and 900 million yuan.
The stock decline highlights investor sensitivity to profitability metrics in the competitive lidar sector, even as Hesai expands its market leadership and secures key automotive partnerships. Investors will be watching the second-quarter results closely to see if the company’s new strategic initiatives and higher-end products can reverse the margin compression.
This article is for informational purposes only and does not constitute investment advice.
