China’s economy may be dealing with some turbulence but through it all, its electric vehicle sector has remained red hot, as has the global market for its products. American EV producers have recently enjoyed a profitable week, but this morning brought some welcome news for Shanghai-based automaker Nio (NYSE:NIO) when an analyst issued a bold price prediction that instantly sent NIO stock on an upward trajectory.
Nio Stock: What Happened?
In the report released this morning, Goldman Sachs analyst Fei Fang changed his position regarding NIO stock, upgrading it to a “buy” from a “hold” and maintaining his $56 price target for it. This target implies 66% gains were it to come true.
Since the news broke this morning, NIO stock has been on an upward trajectory that is gradual but steady. As of this writing, it has risen by 7.1% for the day and although gains have slowed since noon, it shows no immediate signs of declining. Pre-market trading saw it rise by 5.5%.
This report was welcome news for Nio, a company whose stock has been prone to market turbulence over the course of the year. Despite hitting a peak of just over $52 per share in July, it has gradually declined since and is presently down almost 11% for the month. A report like this, though, could be exactly what NIO stock needs to turn around and begin gaining again.
What It Means
Despite the difficult year, Feng says Nio has plenty of potential for growth. The sales estimate component of his report accounted for the company’s upcoming ET7 model, an EV that the company has already previewed in early 2021, a move that sent shares skyrocketing to almost $67 apiece.
Nio has indicated that deliveries of the ET7 are slated to begin in 2022 and, despite the supply chain crisis that has caused problems for EV producers across the globe, there doesn’t seem to be any immediate cause to worry about this company in particular. NIO stock enjoyed some gains last week, along with its competitors Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI) after the company after all three companies reported good news on their deliveries for the recent quarter. Nio was able to report a record-setting September for deliveries.
Why It Matters
Feng isn’t the only analyst who sees Nio as a growth stock and a good buy for the coming year. InvestorPlace’s Faisal Humayun recently touted the potential that it has to grow within China’s EV market, noting its joint manufacturing agreement with Jianghuai Automobile Group which will allow it to expand production capabilities significantly as demand increases.
As he summarizes “Overall, with several positive developments and ambitious growth plans, NIO stock looks attractive. Strong upside in shares is likely in the coming quarters.”
The arguments for why the future is bright for NIO stock definitely hold up. Investors should be watching the company as it prepares for model debuts and expansion efforts.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
