Rachel Miu, analyst from DBS, has reiterated buy to Nio Inc (NIO, Financial) despite the company still facing challenges from the harsh competition in the EV market in China. China is best described as the worst place for electric vehicle (EV) brands. Fierce price wars in the EV market in China have urged Nio to sell more with less profit on each car, and the stock price is also far from okay; 38% lower year-to-date.
But Miu sees three reasons that make Nio seems appealing to her:
- More sales: Nio just declared record deliveries throughout Q3 and the newly launched L60 ONVO, the first family focused vehicle from Nio, sold 832 units in just days after the release in late September. They expect 150,000 units delivered for the first nine months of 2024 with projected total sales volume for Fiscal Year 2024 to reach 224,000 units, equals to more than 40% year-on-year.
- Better financial position: A group of Chinese investors just invested RMB 3.3 billion or equals to USD 463.8 million earlier this month for the company's outlook and market response to NIO. With more money inflows, Nio can have the power to strengthen its cash position and help its medium-term development . As per June 2024 the net cash of Nio is RMB 24.3 billion (USD 3.4 billion).
- More presence globally: By its collaboration with strategic investor CYVN Holdings, Nio is able to enhance its presence in the Middle East and North Africa and even establish an R&D center in Abu Dhabi. This strategy will help the company to mitigate the export tariff impact for Chinese goods.
For the reasons stated above, Miu reiterated Buy on NIO with target price of $8 per share or 53% increase from the current price.
GuruFocus sets GFscore for NIO at 77 out of 100 for their awesome growth, moderate financial strength but with less favored profits and slightly high stock price.
According to the one year price targets offered by 26 analysts, the average target price for NIO Inc is $7.55 with a high estimate of $19.05 and a low estimate of $4.01. The average target implies an upside of +44.58% from the current price of $5.22.
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