What should Nio (NYSE:NIO) stock be priced at? Bank of America has a $6 price target on the Chinese electric vehicle (EV) company, which it raised from $5.90.
The price target change came after Nio reported its first-quarter earnings on May 6, revealing a 7.2% year-over-year revenue decline to $1.37 billion. BofA analyst Ming Hsun Lee noted that the decline was attributed to a lower average sales price (ASP). He rationalized that Nio wants to get rid of its 2023 models in preparation for new models.
Revenue is important, but revenue after subtracting out the cost of goods sold is just as important. During the quarter, Nio’s gross profit margin was 4.9% compared to 1.5% a year ago. That came above Lee’s estimate for an increase of 3.2%.
NIO Stock: Bank of America Raises Price Target to $6
Two other Nio metrics tracked by Lee were in line with his estimates:
“Operation loss was RMB5.4bn, in line with our forecast. Non-GAAP net loss was RMB4.9bn in 1Q24, up 18% YoY/down 1% QoQ, largely in line with our estimate of RMB4.8bn.”
That makes sense, as his price target only increased by about 2%.
Citi analyst Jeff Chung is more bullish than Lee. He has a “buy” rating and price target of $8.50, which was lowered from $10.40. The analyst raised his 2024 and 2025 delivery estimates from 190,000 and 259,000 vehicles to 227,000 and 308,000 vehicles to account for Nio’s two new, lower-priced brands, Onvo and Firefly.
Onvo’s first vehicle, the L60 SUV, will start at around $30,00 with deliveries beginning in Q3. The vehicle seeks to compete with Tesla’s (NASDAQ:TSLA) Model Y.
As for Firefly, the brand will center around small vehicles. Its first model is expected to be launched in China by the end of the year, carrying a starting price between $13,800 and $27,600. Afterwards, Firefly will expand to Europe during the first half of 2025, based on sources familiar with the matter.
According to MarketWatch, NIO carries an average price target of 51.35 HKD or $6.57. The highest target is $11.59, while the lowest is $3.71 when converting from HKD to USD at current foreign exchange rates.
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.
