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Is Bullish Outlook on Nio Realistic?
Stock Analysis & Ideas

Is Bullish Outlook on Nio Realistic?

Nio (NIO) is an EV manufacturer based in China. I am bullish on the stock.

From early 2020 to now, Nio has gone from near-zero to hero. Today, you probably won’t hear too many people speculating that Nio will go bankrupt.

It’s been an extraordinary journey for the company. You’ll even find evidence that Wall Street analysts are taking a shine to Nio nowadays.

One big-bank analyst in particular is setting his sights on an ambitious price objective for NIO stock.

As we’ll see, their optimism is justified, and there’s data to show that Nio is delivering some of the company’s best numbers to date. (See Analysts’ Top Stocks on TipRanks)

A Quick Look at NIO Stock

The $53 mark has been a crucially important level to watch for NIO stock.

First of all, the stock started off 2021 at around $53. So, that could be considered the baseline price for this year.

Furthermore, $53 proved to be a stubborn resistance level in late June. The sense of optimism was quelled when the buyers were rejected there.

The good news is that NIO stock bounced off of $33 in early October as the buyers showed up in full force. In other words, the worst might be over for the loyal shareholders.

A Big Upgrade

One Wall Street analyst’s opinion shouldn’t be your entire basis for owning any stock.

However, when a company gets a big upgrade, you can choose to take it into consideration.

For instance, Goldman Sachs analyst Fei Fang offers some compelling reasons to think about a long position in NIO stock now.

Fang recently upgraded Nio to a Buy. Fang also issued a $56 price target for NIO stock, which is higher than the previously mentioned $53 resistance level.

It might seem like a bold move for Fang to issue an upgrade. As you may recall, there was a fatal car accident in August, which involved a Nio car driving with its Navigate on Pilot (NOP) autonomous driving mode on.

Plus, the automotive industry has been hindered by semiconductor shortages.

A Pricey Car

On the other hand, Fang expects to see “strong volume expansion” at Nio. The company’s launch of the ET7 electric sedan in China, expected to go on sale in Q1 2022, should contribute to this volume expansion.

According to Fang, the ET7 is expected to be “China’s priciest car model launched by a domestic brand.”

This shouldn’t be off-putting to car buyers, or to Nio’s shareholders. It’s a smart strategic move for Nio to introduce a luxury electric car “in the same class with peer full-size premium sedans including Mercedes S-class and BMW 7,” Fang believes.

Nio also plans to double the capacity of its Hefei plant from 120,000 vehicles per year to 240,000.

Moreover, Nio posted an impressive 125.7% year-over-year increase in global vehicle deliveries in September. The company’s on the right track.

Wall Street’s Take

According to TipRanks’ analyst rating consensus, NIO is a Strong Buy, based on eight unanimous Buy ratings. The average NIO price target is $60.26, implying 45.3% upside potential.

The Takeaway

There’s no need to be discouraged by the $53 resistance level in NIO stock.

If Fang is correct, then there are multiple reasons to believe that NIO stock will reach $56 — which would provide outstanding gains for today’s shareholders.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of Tipranks or its affiliates, and should be considered for informational purposes only. Tipranks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. Tipranks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by Tipranks or its affiliates. Past performance is not indicative of future results, prices or performance.

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