Written by Cláudio Afonso | LinkedIn | X
Citi analyst Jeff Chung released a research note on Thursday regarding Nio, commenting on the “in line to slightly positive” official launch of the Onvo L60 SUV and its potential impact on the company’s financial outlook.
Earlier this month, the analyst had cut the firm’s price target on the stock to $7.00 from $8.50 while maintaining a Buy rating.
Nio shares closed 7.57 per cent higher at $5.40 on Thursday, bringing the stock’s one-month gains to 35 per cent. However, the year-to-date performance remains down by 40 per cent.
At the event held earlier this Thursday in Hefei, China, the electric vehicle manufacturer announced a “lower-than-expected entry-level price,” which Jeff Chung attributed to the use of a smaller-than-usual battery, enabling the company to lower production costs.
“Nio launched Onvo L60 tonight, with starting price of 60kWh standard range at Rmb206.9k (BaaS Rmb149.9k + monthly battery fee Rmb599) [equivalent to ($26,307)] and that of 85kWh long range at Rmb235.9k (BaaS Rmb149.9k + monthly battery fee Rmb899),” he stated before providing Citi’s view on the pricing.
“We believe the lower-than-expected entry level price attributed to its smaller 60kWh battery, compared to typical 75-80kWh in mid-size SUVs,” Jeff Chung wrote.
Citi analyst reiterated a Buy rating and $7.00 price target on the stock. Based on Thursday’s closing price, the target represents an upside potential of 29 per cent.
In terms of sales forecasts, Chung said Citi expects “steady monthly sales of around 8,000 units”. Earlier this month, Nio founder and CEO William Li said the company is targetting 10,000 units delivered in December and a 20,000 monthly rate “sometime next year.”
“Overall, we view the launch as in line to slightly positive, projecting steady monthly sales of ~8k units, supported by (1) its effective purchase cost of Rmb180k (factoring Rmb599/month BaaS fee), which aligns with compact SUVs typically selling 5-6k units,” Chung stated.
As another reason, the analyst mentioned L60’s “positioning as a mid-size SUV with Nio’s brand backing and battery swap functionality, which should drive higher demand”.
Earlier today, also Morgan Stanley analyst Tim Hsiao published a new note stating the price “surprised the market on the upside.”
While reiterating an Overweight rating and a $6.10 price target on the shares of the electric vehicle maker, the analyst noted that, together with incentives in China, will result in “higher order conversion and sales expectations.”
Written by Cláudio Afonso | LinkedIn | X
