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Nio: Strong Revenues and Outlook Buoys Analyst Confidence
Stock Analysis & Ideas

Nio: Strong Revenues and Outlook Buoys Analyst Confidence

Electric vehicle maker Nio Inc. (NIO) released its unaudited second-quarter 2021 earnings to reflect a remarkable 127.2% year-over-year, and 5.8% sequential growth in revenues, which came in at RMB 8,448 million ($1.31 million).

Gross margin increased to 18.6%, compared to a 8.4% a year ago. Non-GAAP net loss per share was RMB 0.21 ($0.03). (See Nio stock charts on TipRanks)

William Bin Li, founder, chairman, and CEO of Nio, stated that that the company is focusing on launching more premium smart EV offerings globally, to take advantage of the growing EV adoption across the world.

“We aim to deliver three new products based on the Nio Technology Platform 2.0 in 2022, including ET7, a flagship premium smart electric sedan,” he said.

Nio’s second-quarter vehicle sales were 21,896 units, 111.9% more than the year-ago quarter. Management projects vehicle sales between 23,000 and 25,000. Wall Street consensus is 23,300 units. At 24,000, the unit sales would reflect a 97% year-over-year surge, despite ongoing chip shortages.

Mizuho Securities analyst Vijay Rakesh observed that July’s vehicle sales (7,931) were about 2% lower than June’s, possibly due to constraints in chip supply, combined with a seasonal decline in sales.

In its earnings call, Nio announced the renewal of its manufacturing agreement with JAC Motors, which doubles its annual production capacity to approximately 240,000 units.

Rakesh points out “value leadership in the premium EV segment with solid battery technology and ADAS roadmaps” as positive growth catalysts. Moreover, the company’s core business is concentrated in domestic China, which eliminates any international regulatory roadblocks and minimizes competition from international rivals. Nonetheless, Nio is aiming to break the domestic barriers and expand its global reach.

“Global expansion is in the works and we believe will become a meaningful contributor to future growth,” said the analyst, who reiterated a Buy rating on the stock with a price target of $65. Notably, the price target suggests 47.8% upside potential from the current level.

Wall Street’s Take

Consensus among analysts for Nio is a Strong Buy based on six Buys. The average Nio price target of $64.17 implies 45.9% upside potential to current levels over the next 12 months.

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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