NIO Stock Rises 10% as Deutsche Bank Reiterates ‘Buy’ Rating

  • Deutsche Bank analyst Edison Yu reiterated a “buy” rating on Nio (NIO) stock and a price target of $39.
  • Bank of America analyst Ming-Hsun Lee reiterated a “buy” rating as well and raised his price target to $30.
  • Shares of NIO stock are down more than 30% year-to-date.
NIO stock - NIO Stock Rises 10% as Deutsche Bank Reiterates ‘Buy’ Rating

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Shares of Nio (NYSE:NIO) stock are up by more than 10% following Deutsche Bank’s reiteration of a “buy” rating and a price target increase by Bank of America. Deutsche analyst Edison Yu reiterated his price target of $39 after the Chinese electric vehicle (EV) company reported earnings.

Nio reported an earnings per share (EPS) loss of $1.35, which was below Deutsche’s estimate for a loss of $1.17. However, revenue tallied in at $1.49 billion, beating the consensus analyst estimate of $1.41 billion. For Q3, Nio expects between 31,000 and 33,000 deliveries, which would imply between 10,300 and 12,300 deliveries this month.

After earnings, Deutsche raised its full-year delivery forecast by 5,000 vehicles to 140,000. This implies around 57,000 deliveries during Q4. On top of that, Yu characterizes Nio as a “top China pick” due to high demand, even with older models such as the 866. The analyst believes that 866 models will be transferred onto the NT 2.0 platform next year.

Yu also adds that Nio is working to differentiate itself from other EV makers with features like battery swapping and internal cell development.

NIO Stock Receives Positive Coverage From Analysts

Following positive ET5 customer feedback, Bank of America analyst Ming-Hsun Lee raised his price target to $30 from $29. Lee notes that after Nio launched the ES7, orders for the ES8, ES6 and EC6 models did not slow down. Meanwhile, the launch of the ET5 and ET7 have different addressable markets than previous models due to pricing and car size. As a result, the new models should not cannibalize on older models.

Lee added, “In our view, NIO’s volume growth trend should be stronger than Xpeng and Li in the next few quarters as most of its EV products are new, and new generation of ES8/ES6/EC6 will be launched in 2023 to sustain demand.”

Furthermore, Nio received yet another positive note from Citic Securities. Analyst Yin Xinchi reiterated a “buy” rating and a price target of $23. Due to the coronavirus pandemic and lockdowns in China, the analyst lowered his 2022 delivery forecast to 150,000 EVs, down from 170,000. For 2023 through 2024, Xinchi expects between 300,000 and 500,000 deliveries. He also points out that Nio’s deliveries next year will be similar to Tesla’s (NASDAQ:TSLA) deliveries between 2016 and 2018. Using Tesla’s 2016-2018 end of year price-sales ratio (P/S) of between 2.3 and 2.7, the analyst assigns Nio a 2.5x 2023 (NTM) P/S ratio, which is equivalent to a price of $23.

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 InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.


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