Sometimes Wall Street likes China-based electric vehicle (EV) manufacturer Nio (NYSE:NIO); other times, the automaker is in the doghouse. In recent months, financial traders have favored NIO stock and it has nearly doubled in price. The stock should still have some gas left in the tank, however, especially in light of Nio’s latest EV delivery data.
I’ll admit, I encouraged Nio’s shareholders to lock in some gains not long ago. That’s still a viable option if you’ve nearly doubled your money in a few months’ time. Yet, it’s also perfectly reasonable to maintain a small share position in Nio. So, let’s delve into the data and see if the bull case still holds up.
An Ambitious Price Target for NIO Stock
Last month, Morgan Stanley analyst Tim Hsiao didn’t seem very optimistic about NIO stock, as he called it a “show-me” stock. It would “take a few more rounds of guidance ‘meet or beat’ to fully restore market confidence in NIO, in our view,” Hsiao commented.
More recently, however, Hsiao may have changed his tune. This month, the Morgan Stanley analyst assigned Nio shares an $18.70 price target, implying significant upside from the stock’s current price, along with an “overweight” rating.
Why would Hsiao raise his NIO stock price target from $12 to $18.70? The analyst claims that Nio’s “lackluster 1H23 is now behind us.” Furthermore, he’s now “starting to see an inflection point of meaningful operational improvement and potential rerating opportunities” for Nio, based on “volume upturn, policy tailwinds, autonomous driving and technology monetization.”
Nio Sets a Record With Outstanding Delivery Data
All of this leads us to the billion-dollar question: Is Nio’s “lackluster” first half of 2023 really “behind us,” and is the automaker truly at an “inflection point”? I dug into Nio’s latest EV delivery results and did, indeed, discover a “volume upturn” that could point to “potential rerating opportunities.”
With that in mind, let’s delve into Nio’s monthly vehicle delivery results. As you may recall, Nio delivered 6,155 vehicles in May of this year. Hsiao’s term, “lackluster,” may come to mind here. Yet, in June, Nio delivered 10,707 vehicles — a huge improvement, you must admit.
It only gets better from there, though. In July, Nio delivered 20,462 vehicles, up 103.5% year-over-year. Moreover, this represents a monthly EV delivery record for Nio.
Particularly noteworthy was Nio’s deliveries of its ES6 electric SUV model, which exceeded 10,000 in July. Hopefully, Nio can continue to demonstrate this magnitude of improvement as the summer winds down.
So, Is It Too Late to Buy NIO Stock?
Hsiao’s Nio share price target of almost $19 is optimistic but not entirely unrealistic. Still, it will be challenging for Nio to maintain its current pace of monthly EV delivery acceleration.
It’s not too late to invest in Nio, but you’ll want to be prudent about it. In my humble opinion, the best strategy now is to hold just a few shares of NIO stock. That way, you can get exposure to Nio’s ongoing growth story without taking on too much risk.
On the date of publication, David Moadel 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.
