Citigroup has lowered its price target on CATL's (ASX: 300750) A shares from RMB500 to RMB479, and cut its target on the company's H shares from HK$765 to HK$732, following weaker-than-expected third-quarter results.

Analysts led by Jack Shang wrote in a report that the Q3 net profit miss was mainly driven by lower-than-expected gross margin, higher expenses and increased asset impairment losses.

The gross margin shortfall was largely due to the recognition of shipments of lower-margin products, the impact of consumption tax, and a reduction in export tax rebates for batteries.

The bank lowered its earnings forecasts for CATL for 2026-28 by 9%, 14% and 15% respectively, to RMB86 billion, RMB103 billion and RMB122 billion.

The stock remains the sector's top pick, but given the results miss, Citigroup expects the next window for outperformance may come in the first quarter of 2027, after all negative news has been digested.

CATL's A shares closed at RMB259.08 on Tuesday, and the revised target price implies about 85% upside.

Year to date, the company's share price has fallen 29.5%.