Written by Cláudio Afonso | LinkedIn | X
Citi analyst Jeff Chung published a new research note on Wednesday lowering the price target on the electric vehicle (EV) stock Nio to $7.00. (from $8.50) while maintaining a Buy rating.
Based on Tuesday’s closing price of $4.15 per share, the firm’s new price target represents an upside potential of 68.7 per cent on the stock. Nio shares peaked in January 2021 at about $67 per share and have lost 93.8 per cent of its value over the last three and a half years.
In its latest research note published on Wednesday, Citi’s analyst said the firm “expects the ongoing volume growth and lower promotional incentives to positively affect” Nio’s Gross Profit Margin in the last two quarters of the year.
The Shanghai-headquartered company has delivered, for the fourth consecutive month, over 20,000 vehicles in August.
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“Nio is currently trading at 0.8x/0.6x 2024E/25E PS, ~30-40% discount versus Xpeng’s 1.4x/0.9x 2024E/25E PS,” Chung noted comparing both Chinese pure EV makers.
“We expect Nio/Xpeng’s 24E/25E valuation to converge and open up an arbitrage opportunity for Nio, backed by sector/policy driven consumption downgrade tailwinds,” he added.
Citi is raising its estimates for the current year and for the next two by 1 to 9% while reaffirming its Buy rating on the stock.
“We raise our EPS estimates by 1-9% for 24E-26E, but cut our TP [target price] from US$8.50/HK$65.20 to US$7.00/HK$53.70, by applying 1.4x 2024E P/S (1-year average, from 1.7x earlier). Maintain Buy [rating],” the analyst wrote.
Written by Cláudio Afonso | LinkedIn | X
