Citi Just Slashed Its Price Target on NIO Stock

  • Citi lowered its Nio (NIO) price target to $41.10.
  • Despite the price reduction, Citi analyst Jeff Chung seems to remain bullish.
  • Share of NIO stock are down more than 30% year-to-date.
NIO stock - Citi Just Slashed Its Price Target on NIO Stock

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Nio (NYSE:NIO) is in focus after Citi analyst Jeff Chung lowered his price target from $87 to $41.10 while maintaining his “buy” rating. The price target reduction comes as a surprise, as Chung reiterated the $87 level just ten days ago on June 11.

Chung is ranked at 2,443 out of 7,892 total analysts on TipRanks. The analyst has an average return of 7.8% and a success rate of 55% over a one-year period. Meanwhile, shares of NIO stock are accelerating higher by about 10% today. Let’s get into the details of Chung’s price target reduction.

Citi Lowers NIO Stock Price Target to $41.10

While the analyst lowered his price target by about 53%, he still seems bullish on Nio’s prospects. In addition, $41.10 implies upside of about 80% from current prices. It’s likely that Chung lowered his price target to reflect current market conditions.

If gasoline and lithium-carbonate prices increase by another 25% to 50% year-over-year, Chung believes electric vehicle (EV) full lifecycle ownership costs would be 36% lower when compared to traditional internal combustion engine (ICE) vehicles. Today, the average price for a gallon of gas in the U.S. sits near all-time highs at $4.97.

In his June 11 $87 price reiteration, Chung noted the company’s listing on the Singapore Exchange and a recovery of production were both bullish factors. He is also bullish on the company’s expansion into Germany, the Netherlands and Sweden. He added:

“NIO gave very strong June sales guidance ceiling at 13k units, or 84% MoM, which may potentially implies 3Q volume may exceed 40k level (in our view), with ample re-rating upside risk ahead on margins and asset-turns.”

With Chung’s view in mind, let’s take a look at how other analysts view the Chinese EV company.

Morgan Stanley and Deutsche Bank Chime in on NIO

  • Deutsche Bank has a price target of $45. Analyst Edison Yu acknowledges production has been threatened by the coronavirus and lockdowns in China in recent months. However, he expects volume to pick up toward the end of the year to 25,000 vehicles per month. This will “shift the narrative away from supply constraints to robust product supercycle.” For the full year, Yu expects 160,000 deliveries. In 2023, he expects that figure to double.
  • Morgan Stanley has a price target of $31. Analyst Tim Hsiao believes June sales between 11,000 and 13,000 EVs should “help NIO restore investor confidence.” He adds that even if new models don’t generate positive free cash flow in the short term, the company’s portfolio of existing vehicles should still attract further customers. Finally, Hsiao characterizes Nio as a “laggard” in the startup EV space, but expects the trend to reverse soon.

On the date of publication, Eddie Pan did not hold (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 Publishing Guidelines.

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