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Analysts revise Nio stock price targets ahead of earnings

Analysts revise Nio stock price targets ahead of earnings
Elmaz Sabovic

As the EV industry shows signs of recovery, Nio (NYSE: NIO) has reported record-breaking delivery numbers, signaling a potential turnaround. 

Nio announced over the weekend that it delivered 20,544 vehicles in May, a 233.8% increase from May 2023. These deliveries included 12,164 electric SUVs and 8,380 electric sedans.

Year-to-date, in 2024, Nio has delivered 66,217 EVs, marking a significant 51% increase compared to the same period last year.

Positive developments for Nio

The Shanghai-based automaker received approval to build a third factory in China, boosting its total production capacity to nearly 1 million vehicles annually. This new factory, located in Huainan City, Anhui province, will have an annual capacity of 600,000 units and primarily manufacture vehicles for Nio’s new budget brand. This development brings Nio close to Tesla’s (NASDAQ: TSLA) Shanghai facility, which can produce 1.1 million vehicles annually.

Despite concerns about overcapacity and slowing demand, Nio is moving forward with constructing the F3 plant. Initially, the plant will operate with a capacity of 100,000 units on a single-shift basis. Nio’s expansion aims to meet the growing demand for the automaker and its new brand, Onvo, including newly launched models.

Analysts have mixed opinions about Nio’s prospects

Better-than-expected delivery results in recent months and initiatives to increase production are making Wall Street analysts bullish on Nio stock, which is advancing by 0.22% at the time of writing, elevating its price to $5.22 in the latest trading session. 

Morgan Stanley analyst Tim Hsiao is optimistic, noting that Nio’s cumulative sales could grow further. Hsiao emphasizes the importance of positive comments on order and margin outlooks and additional information on Nio’s new sub-brand, Onvo, in the June 6 earnings report.

Hsiao maintains a positive stance, rating NIO shares as ‘overweight’ with a price target of $10.

On May 27, Bank of America analysts lowered their price target for NIO stock from $6.50 to $5.90, maintaining a skeptical ‘neutral’ rating on the company.

The main challenge for NIO stock moving forward is operational expenditures. Bank of America expects operating expenses for the current year to be higher than estimated. Specifically, they project the opex-to-revenue ratio to rise to 41.6%, up from the previous target of 34.8%.

A lot is riding on the upcoming Q1 earnings report, allowing analysts to assess Nio’s prospects in the upcoming 12 months, with huge potential if the growth outlook matches or even exceeds expectations.

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