Is it finally time to get bullish on Nio (NYSE:NIO)? That might be a question that has popped up every once in a while over the last few years during periods when a positive development has taken place at the Chinese EV maker. Otherwise, it’s been mostly doom and gloom for investors who have watched the shares slide by 89% over the past 3 years, with a 48% drop since 2024 entered the frame.
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While no upward movement for the stock has seemed sustainable so far, according to Deutsche Bank analyst Edison Yu, it could be ‘blue sky rising’ right now.
“With demand now at the strongest levels this year (despite having no new models), we think management may have finally turned a corner after some large disappointments over the past few years,” the analyst opined. “NIO delivered >20k units last month and is on track for a similar amount in June, helped by the BaaS price cut and other promotional activity, underpinned by much larger/aggressive direct sales force.”
Yu’s optimism follows Nio’s Q1 performance, where the analyst points out other positive indicators. With increased volume, improved product mix, and potentially reduced promotional expenses, vehicle margins are trending toward low double digits. Additionally, due to “higher utilization” of its energy assets, “other” margin is improving at a much faster rate than previously expected. Moreover, seeing the benefits from the streamlining of its organizational structure, Opex is “also being contained.” The company also offered a better-than-anticipated volume forecast for Q2, expecting deliveries will come in between 54,000-56,000, thereby easily beating Yu’s call for 47,500.
Consequently, Yu has revised his sales forecast for the year upward, now anticipating RMB63,808 million compared to the previous RMB61,874 million.
All in all, the analyst rates Nio shares a Buy, setting a $9 price target, which implies approximately a 91% upside from current levels. (To watch Yu’s track record, click here)
Turning now to the rest of the Street, where the average target is a more modest $6.33, although that figure is still set to deliver solid gains of 34% over the next year. Rating-wise, based on a mix of 6 Buys, 7 Holds and 1 Sell, the consensus view is that NIO stock is a Moderate Buy. (See Nio stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
