With a loss of 50% year-to-date, NIO (NIO) shares have been the victim of several negative developments in 2022. These include rotation away from growth, supply chain snags impacting production and the fear of U.S. delisting for Chinese stocks. And most recently, zero-Covid policies have sent large parts of China into lockdown again.
But following chats with management at Mizuho’s 4th Annual Auto Technology Seminar, 5-star analyst Vijay Rakesh thinks change might be on the way.
“With light at the end of the tunnel for Shanghai lockdowns, NIO appears on track for L-T growth with its premium EV leadership, EU/global expansion underway, and mass market brand launch in 2024E,” Rakesh said.
As supply is improving and May production appears to be getting better week-by-week following the Shanghai reopening, Rakesh believes that by early June, production could “potentially” be back to pre-shutdown levels.
With further improvements anticipated in the supply chain, the analyst thinks it won’t be outlandish to see NIO “ramping towards” the designed capacity of ~240,000 in 3Q22E. The company is also making sure it can deal with any future supply tightness and is looking at several suppliers for key components.
Additionally, with tooling/production trail underway for NIO’s mid-size smart electric sedan, the ET5, at the 300,000 a year capacity NEO Park facility, Rakesh believes the company is on track for a production ramp in 2H22E which could further boost 2H production/output capacity.
There’s also the launch of the next-gen “Nio Pilot +” with “improved functionality” to look forward to in the months ahead. The product also appears financially attractive when compared to Tesla’s equivalent offerings; Nio’s Pilot+ ADAS are sold in RMB15,000 and RMB39,000 option packages, amounting to a 40-50% discount to Tesla’s analogous Autopilot and Full Self Driving, which are sold for RMB 32,000 and RMB 64,000.
All told, Rakesh rates NIO shares a Buy along with a $60 price target. The figure suggests shares will rise by a huge 275% in the year ahead. (To watch Rakesh’s track record, click here)
The Street almost unanimously agrees with Rakesh’s take; barring one skeptic, all 14 other analyst reviews are positive, making the consensus view a Strong Buy. The average price target clocks in at $40.61, implying the stock has room for one-year growth of 147%. (See NIO stock forecast on TipRanks)
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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.
