Nio (NYSE:NIO) stock’s long, painful correction continued in 2023. The stock has generally been on the backfoot since early 2021 when the outlook for the EV sector was much rosier. But recent times have been more difficult for the industry with many of the companies involved suffering against a backdrop of increased competition, falling demand and a tough economic environment.
Meanwhile, the Chinese EV maker has been unable to meet its targets. For 2023, the company was hoping to deliver 250,000 vehicles initially but had to settle on a far less impressive 160,000.
However, with the new year now in play, Mizuho analyst Jason Getz thinks the company still has plenty going for it.
“We see NIO well-positioned as a leading premium EV player in China, the largest EV market globally,” Getz said. “We believe NIO differentiates itself with its proprietary battery-as-a-service (BaaS) swapping program, which has now expanded with multiple partners including Geely, Changan, and we believe a 3rd to be announced soon, to help develop and standardize battery swapping technology.”
While Getz also points out 2023’s vehicle delivery miss, the set up appears more favorable this year, with the analyst expecting Nio to ramp-up to around 230,000 units, which will amount to a year-over-year increase of ~44%.
The positive outlook is supported by the transition of all models to NIO’s NT2.0 platform, a “renewed focus” on its core portfolio, expansion of the sales team, and the strategic move to bring vehicle manufacturing in-house via the purchase of manufacturing equipment and assets from JAC. This acquisition has the potential to generate a 10% reduction in manufacturing costs.
Concerns regarding cash burn in the near term are also expected to ease, thanks to a recent cash injection of approximately $2.2 billion from a strategic equity raise with Abu Dhabi-based CYVN Holdings.
NIO also continues to distinguish itself through its innovative battery-swapping technology, which addresses the challenges associated with charging accessibility and vehicle charge times. This issue is considered one of the biggest hurdles to broader EV adoption.
Additionally, the company is actively curbing or delaying spending on non-essential projects, aligning with its goal of achieving a long-term vehicle gross margin exceeding 20%.
All told, Getz rates NIO shares as a Buy, while his $15 price target suggests shares will climb 95% higher over the coming year. (To watch Getz’s track record, click here)
Over the past 3 months, in total, 10 analysts have waded in with NIO reviews, which break down into 7 Buys and 3 Holds, all culminating in a Moderate Buy consensus rating. The forecast calls for one-year returns of ~44%, considering the average target stands at $11.06. (See Nio stock forecast)
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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.
