As stock markets cautiously peeked back into “green” territory after Monday’s astounding selloff, shares of one company in particular raced ahead of the pack: Chinese electric vehicle maker Nio Inc. (NIO).
Less than a week after reporting its Q1 financial results (vehicle deliveries up 28.5% year-over-year, and revenues up 24.2% — but losses up 295%!), Nio worked to change the story Tuesday, by announcing it will launch a new product on Wednesday, and meeting with analysts to give them some insight into what’s coming up next.
And indeed, the company held a Product Launch Event today, which unveiled the ES7, a new mid-to-large five-seater SUV based on NIO Technology 2.0 (NT2.0).
Deutsche Bank analyst Edison Yu writes that despite Nio’s disappointing earnings last quarter, “NIO is embarking on the most important product cycle in the company’s history.”
The analyst continued, “Volumes have been under pressure over the past few quarters due to operational bottlenecks and COVID lock-downs, but… NIO has fully returned to normal production levels [and now] deliveries are on track to increase from 7k/month in May to 25k exiting the year.” That’s a significant number — 25,000 cars built per month — given that Nio barely made 25,000 deliveries in all its first three months. And assuming Nio hits this target, Yu forecasts the company could deliver 160,000 EVs this year, and twice that — 320,000 units — in 2023.
In Yu’s view, Nio’s ET7 and ET5 electric sedans are likely to be “the most desired cars in the China premium market this year” — meaning they’ll be even more popular than Teslas.
To this end, Yu rates Nio shares a Buy and has a $45 price target on this $19 stock. (To watch Yu’s track record, click here)
Next up: Morgan Stanley analyst Tim Hsiao.
Like Yu, Hsiao is optimistic about Nio stock, albeit a bit less enthusiastic than his counterpart. Hsiao rates Nio stock Overweight (i.e. buy), but with only a $31 price target. (Hsiao’s track record)
As Hsiao explains, Nio will experience “inevitable… near-term margin pain” in Q2. However, sales look to be trending up once Q2 is past, and Hsiao actually thinks Nio could be producing as many as 30,000 electric cars per month by the end of this year — 20% more than Yu thinks likely.
Added to Nio’s stable of other electric vehicles — the ES8, ES6, EC6, and ET7 — Hsiao sees the ES7 contributing to a bright future for Nio after it gets through Q2 and its “margin pressure.”
In short, bad as earnings were in Q1, and despite the risk that Q2 will show more bumps in the road, both these analysts like Nio stock quite a lot — and see a lot of upside in the shares. (See NIO stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
