Production issues due to industry-wide supply-chain disruptions and a slowdown in the Chinese economy took a toll on Nio’s (NYSE:NIO) ADR (American Depositary Receipt). Further, regulatory concerns and negative investor sentiment on Chinese stocks played spoilsport.
Given the challenges, Nio stock is down about 57% from its 52-week high. Further, it has decreased by about 25% this year.
Now What?
A series of positive developments, including strong Q1 delivery numbers, the launch of new models, a planned geographic expansion, and the expected easing of the regulatory environment post Chinese vice-premier Liu He’s positive commentary indicates that better days are ahead for Nio.
Notably, Nio delivered 25,768 vehicles in Q1, up 28.5% year-over-year. Moreover, Nio began delivering the ET7 in March. Furthermore, the company plans to launch the ES7, its first SUV model, in the second half of the year and start delivery in Q3 of 2022.
Besides new model launches, Nio plans to enter Sweden, Germany, Denmark, and the Netherlands in 2022, which is positive. Further, during the Q4 conference call, Nio’s CEO, William Li, stated that the “mass-market brand has been progressing according to plan.”
Highlighting the recent decline in price and improving prospects (including new model launches), UBS analyst Paul Gong upgraded Nio stock to a Buy. Along with Gong, Mizuho Securities’ Vijay Rakesh is also bullish on NIO.
Rakesh stated that Nio’s global expansion and “mass market launch ahead” will support its long-term growth. However, Rakesh lowered his price target to $60 from $65 due to the near-term headwinds.
Final Thoughts
Nio’s multiple growth vectors (new model launches and expansion into newer markets) and ongoing electrification wave in the automotive industry position it well to deliver strong financials. However, supply-chain volatility remains a drag in the short term.
Nevertheless, Wall Street is Bullish on NIO stock. It has received 17 Buy and two Hold recommendations for a Strong Buy consensus rating. Moreover, NIO has a maximum Smart Score rating of 10 out of 10, per the TipRanks’ data-driven stock score.
Further, due to the recent correction in its price, Nio’s stock price forecast on TipRanks shows stellar upside potential. The average Nio price target of $44.06 implies 84.7% upside potential to current levels.
Download the TipRanks mobile app now
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Read full Disclaimer & Disclosure
