Nio (NYSE:NIO) stock has suffered significantly over the past few months as the lockdown in China and supply chain issues have troubled many Electric Vehicle (EV) makers.
NIO stock hit the lows of $12 in May but it has managed to recover the losses. The stock has surged more than 30% this month and is up 44% from the recent lows.
This could be due to the easing of lockdown restrictions in China which will give the shares a much-needed boost to enhance production and meet the rising demand.
I believe Nio stock is still in the growth stage and it has a long way to go. Despite the pandemic and the supply chain issues, the company managed to report strong deliveries month after month and this is proof of the potential it holds.
In my previous coverage of the stock last month, it was trading at $15. If you had purchased it then, you would be sitting on gains of 44% today. However, it is still not too late to make the move. Let’s take a look at what Wall Street analysts think of the stock.
A Closer Look at Nio Stock
Vijay Rakesh, a Mizuho analyst has a price target of $48 with a “Buy” rating on the shares.
The analyst has set the price target considering the June quarter and the second half of 2022 unit delivery estimates due to supply chain issues and Shanghai lockdowns.
However, Rakesh predicts strong EV demand despite the higher prices and longer lead times. We could see a strong second half of 2022 ramps once China reopens and the demand grows.
Citi analyst Jeff Chung has a price target of $41.10 for the stock with a “Buy” rating. In a research note, the analyst states that EV buying decisions hinge on the attractive value proposition of the full lifecycle costs.
With gasoline and lithium carbonate prices rising by another 25%-50% year over year in the next two years, the full lifecycle ownership costs will be significantly lower for EVs. Chung sees a 98% total return on NIO stock.
Morgan Stanley analyst, Tim Hsiao has a price target of $31 with an Overweight rating. The analyst believes that the company has several drivers working in its favor.
He adds that if the company can manage to report more than 11K deliveries for June, it will help restore investor confidence and help the stock soar before the month of August.
The Bottom Line
Nio will gain momentum once it reports June deliveries and the quarterly results. The stock might not be this cheap then.
With several analysts expecting the company to grow and deliver strong numbers, there is a high chance for the stock to continue moving upwards.
We might see another loss this quarter due to the rising battery costs and the supply chain issues but the bigger picture looks promising. If NIO stock continues to gain in the coming weeks, investors can make up for the earlier losses.
Buy NIO stock while it is trading below $25.
On the date of publication, Vandita Jadeja 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.