Nio stock will finally “shine bright” after unexpected speed bumps, a leader among Chinese EV startups, a Wall Street firm said Monday. no (NIO), an emerging Tesla (TSLA) rival rose, recapturing a key technical level and aiming for an early buy point.
After a mixed earnings report last week, Nio should see two factors driving its outperformance over other EV newbies, Deutsche Bank analyst Edison Yu wrote in a note to clients on Monday.
First, the upcoming ET5 mid-size electric sedan could become a top-selling premium model, “with initial overwhelmingly positive customer reception,” Yu said. He cited social media buzz.
Nio is expected to start production of the ET5, its third new electric vehicle in 2022, in late September. It had launched the full-size ET7 sedan in March. The ES7, a new electric SUV hit the streets in August.
Second, older-generation Nio electric SUVs, including the ES6, ES8 and EC6, continue to sell solidly due to thoughtful pricing and strong service, despite being more expensive than competing EVs, Yu said.
Nio will be upgrading these older models over the next year.
Yu again named Nio stock his top pick for Chinese EVs and expects to continue a “product super cycle” as several new EVs launch. He rates Nio stock as a Buy with a 12-month price target of 39.
Nio stock extends gains, eye buy point
Shares of Nio are up 13.7% to 21.79 in a big way in the stock market today, climbing for a fourth straight session. Nio stock regained the 50-day moving average on Monday but remains below the 200-day moving average. Chinese EV stock also remains 51% below the 52-week high, but its relative line of strength is improving. It hit a nearly two-year low in May as electric vehicle sales fell due to supply shortages.
Nio stock is bottoming again. Monday’s strong move above the 50-day moving average and a trendline could be seen as an aggressive entry, but the 200-day moving average is approaching. Investors could use a move above the 200-day moving average as an early entry, slightly below the official buy point at 24.44.
startup rival Li car (LI) was down 1% on Monday to 6/26, near a three-month low. Xpeng (XPEV) is up 2% to 16.35, near all-time lows. Electric car giant from China BYD (BYDDF) is up 2%, trying to recover from huge losses ahead of Labor Day.
Tesla rose 1.6% on Monday, extending a 10.9% rally over the past week.
Nio earnings disappoint but outlook compensates
Nio rose 8.1% last week despite a worse-than-expected second-quarter loss.
However, the China EV newcomer gave a better-than-feared third-quarter delivery outlook. It indicated robust demand for several new electric vehicles, as well as expansion in Europe, a top market for Tesla.
“For the fourth quarter, management said it expects to ship record volume each month, with a peak in December of 10,000 ET5 units (internal target even higher),” Yu wrote on Monday.
The analyst raised its full-year Nio delivery forecast by 5,000 units to 140,000. That translates to about 57,000 in the fourth quarter versus an estimated 32,000 in the current third quarter.
The Chinese manufacturer of premium electric vehicles is also expanding in Europe.
Some reports suggest that Nio could launch a more affordable brand within the next year or so.
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