Nio Is Highly Attractive for Longer-Term Investors, Says Analyst

Compared to 2020’s majestic returns for anything EV-related, 2021 has been a hard slog for investors of the nascent sector. As evidence, look no further than Nio (NIO). Shares of the ‘Chinese Tesla’ have taken a beating this year with the stock notching a 21% loss since January.

In this instance, though, it is definitely worth zooming out a bit. The shares gained over 1,172% last year and some sort of pullback should only be anticipated after such explosive returns.

In any case, with the auto industry pivoting to an electric future, The EV story is one with many pages still waiting to be written. Following recent investor meetings, Deutsche Bank’s Edison Yu thinks there’s plenty to look forward to when the page turns to the Nio chapter.

“While near-term semis supply chain issues continue to limit sales, the order book exited August at a record high level and the mid-term outlook appears very encouraging, given aggressive capacity expansion plans (600k units by end of next year, suggesting much larger ramp-up than our/consensus forecasts,” Yu noted.

According to management, next year should include 3 new products; the ET7 (large sedan), ET5 (mid-size sedan akin to the Tesla 3-series), and a yet-to-be revealed third vehicle which Yu thinks will be a luxury MPV (large van) “similar” to the Toyota Alphard.

In preparation for the ET7’s launch – built on the next-gen NT2.0 platform with deliveries expected to begin in 1Q22 – by the end of the year NIO intends on increasing the capacity of its existing plant to 300,000.

The new NEO Park plant – currently under construction – is expected to account for the remaining 300,000 with the facility ready for production sometime in 2H22. “This will produce the ET5 and yet-to-be announced model both on the NT2.0 platform,” said Yu, although it does not include “any capacity for a mass market brand.”

All in all, Yu rates NIO shares a Buy along with a $60 price target. The implication for investors? Upside of 55%. (To watch Yu’s track record, click here)

The rest of the Street’s take is even more optimistic; going by the $66.01 average price target, shares will accumulate gains of 73% over the next 12 months. All recent reviews are positive, with the stock’s Strong Buy consensus rating based on a unanimous 7 Buys. (See NIO stock analysis 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.

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