Things aren’t looking up for Nio (NYSE:NIO) lately. A recent setback involved the Chinese EV maker lowering its Q1 delivery estimates on account of weaker-than-expected sales in March.
While the revised target of 30,000 (down from the range between 31,000 to 33,000) was met by the company, Barclays analyst Jiong Shao says the reduced figure reflects “weaker sales momentum” of the new 2024 models that were launched in early March.
“With limited new product launches in the pipeline planned for the rest of 2024, we see significant risks for NIO’s ability to meet consensus estimates for the reminder of the year,” Shao went on to ominously add.
However, that problem is not the only one. Over the long-term, Shao anticipates the already “hyper-competitive” Chinese EV market will get even more ruthless. Nio competes in a segment featuring higher-end SUVs and sedans into which Huawei recently announced its arrival with a top-selling SUV and plans to introduce another model soon. Meanwhile, BYD’s premium brand Denza is consistently upgrading its lineup and unveiling new models. Adding to the competition, Xiaomi also joined the EV market last weekend, introducing compelling sedan models.
“NIO thus now faces even more intense head-to-head competition with these strong and much larger competitors, and may lack the necessary scale and resources to succeed,” Shao opined.
Given the weak March deliveries, Shao has now reduced his respective 1Q24, 2024, and 2025 top line estimates by -5%, -13%, and -13%, respectively.
All in all, Shao says that given “mounting competitive pressure and accelerated industry-wide consolidation,” his rating on NIO goes from Equal Weight (i.e., Neutral) to Underweight (i.e., Sell). Moreover, Shao has lowered his price target from $5 to a Street-low of $4, suggesting the stock now has downside of ~11% from current levels. (To watch Shao’s track record, click here)
Shao, though, is currently Wall Street’s lone Nio bear; with an additional 7 Buy recommendations and 8 Holds, the analyst consensus rates the stock a Moderate Buy. Going by the $6.99 average target, a year from now, shares will be changing hands for a 56% premium. (See Nio stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.
