Why This Nio Analyst Is Raising His Price Target For The EV Maker

Nio, Inc – ADR (NIO) reported July quarter deliveries that came in at 7,900 units, representing a 124% year-over-year increase but a 2% sequential drop. For the first time, Nio's volume fell below domestic peers XPeng Inc – ADR (XPEV) and Li Auto Inc (LI). Notwithstanding the underperformance, an analyst at BofA Securities remained upbeat about Nio's prospects.

The Nio Analyst

Ming Hsun Lee reiterated a Buy rating and increased the price target from $60 to $62.

The Nio Thesis

Nio's market share in the Chinese EV market rose from 2% in the first quarter of 2019 to 3.5% in June, analyst Hsun Lee said. The positive opinion on Nio is predicated on solid volume sales, focus on autonomous driving, powertrain and charging solution, faster sales channel expansion, and continuous new model launches, the analyst said.

Nio signed a strategic cooperation agreement with Guoxing Auto Service Center in Beijing to supply vehicles to Chinese central government agencies, central enterprises, and other quasi-government agencies, the analyst noted. The company supplying EV models to the government is a definite positive, he added.

Citing an upward revision of BofA's 2025 passenger EV penetration forecast from 19% to 32%, the analyst raised his volume sales estimates for Nio by 5%, 3%, and 2%, respectively, for 2021, 2022, and 2023. The earnings estimates for 2022 and 2023 were increased by 7% and 1%, respectively, the analyst said.

NIO Price Action

At last check Monday, Nio shares were rising 3.40% to $46.30.