Hesai’s shipment forecasts cut: Why does BofA still favor its new robotics business?
BofA cut its 2026 and 2027 earnings forecasts for Hesai by 44% and 22%, respectively, and lowered its price targets, but maintained its Buy rating. Automotive demand is weighing on current profits, while spatial cameras and actuator modules underpin its long-term view. The key is progress on orders and deliveries for the new businesses.
Original source：BofA Global ResearchFirst published on Unhidea：Original source date：
Key takeaway
Hesai faces lower shipment forecasts and cost pressure in the near term. BofA maintains its Buy rating based on the potential of the new robotics businesses, while orders, deliveries and the 2027 break-even target will determine how quickly that thesis materializes.
Shipments are still growing, so why were earnings forecasts cut sharply?
Weaker-than-expected automotive demand first affects the quantities customers purchase. The report says retail sales of passenger vehicles and battery electric vehicles in China fell year on year by 20% and 13%, respectively, in the first three quarters of 2026. Third-party data show Hesai’s shipments in the first eight months were below BofA’s previous expectations; its lidar demand forecasts for major customers were consequently cut.
BofA lowered its 2026 and 2027 lidar shipment forecasts from about 3.35 million and 4.78 million units to 2.8 million and 3.8 million units, reductions of about 17% and 21%. Shipments in 2026 are still expected to grow 72.8% year on year, but that is a marked slowdown from the previous forecast of 106.9%. Revenue forecasts for the two years were cut by 14.2% and 17.8%, respectively, and net profit attributable to the parent forecasts by 43.6% and 21.6% to 285 million and 784 million yuan.
Why isn’t revenue growth translating into sustained profits?
Under BofA’s new model, Hesai’s 2026 revenue is still expected to grow 25.2% year on year, while net profit falls 34.6%. The report links the decline in full-year earnings to higher expenses: with a smaller revenue base, the expense burden is heavier. The forecast ratio of expenses to revenue for 2026 rises from 34.1% to 37.2%, while the operating margin falls from 6.6% to 3.0%.
The gross margin forecast also falls from 40.7% to 40.2%, bringing the 2026 operating profit forecast down from 291 million yuan to 115 million yuan, a reduction of 60.5%. This explains why the profit cuts are much larger than the revenue cuts. Fierce lidar competition and accelerating declines in average selling prices are also explicit sources of margin pressure cited by BofA.
What exactly do the new robotics businesses add?
On 14 October, Hesai launched Kosmo, combining the 8K spatial camera Kosmo One with the Kosmo World cloud platform to turn real environments into three-dimensional digital spaces for robot training, world model development and content creation. The business link is to provide developers with high-quality real-world data at scale, rather than relying solely on automotive lidar sales.
The company raised its revenue guidance for strategic growth initiatives (SGI), including actuator modules and Kosmo, at its second-quarter earnings call: 200 million–300 million yuan in 2026 and more than 700 million yuan in 2027. It also expects SGI to break even in 2027. Hesai announced strategic partnerships with Galbot and Dexmal, providing product and partnership foundations for BofA’s positive view of its physical AI business.
Why lower the price targets while maintaining Buy?
BofA maintained its Buy rating but lowered its US-listed share price target from 25 US dollars to 23 US dollars and its Hong Kong share price target from 24 Hong Kong dollars to 22 Hong Kong dollars, citing lower earnings forecasts while leaving its valuation methodology unchanged. The price targets are the average of discounted cash flow and enterprise value-to-revenue valuations; the 3.5-times revenue multiple factors in the increasingly diversified mix of lidar and SGI businesses.
The market environment also constrains the new businesses. At the China International Industry Fair, BofA observed that robot makers were placing greater emphasis on practical industrial applications and favored wheeled chassis and grippers over quadruped structures and dexterous hands, putting sentiment toward humanoid robots under pressure. The bank expects near-term sentiment toward Hesai to remain weak, with a turnaround depending on SGI orders and deliveries becoming more concrete.
