Written by Cláudio Afonso | LinkedIn | X
Citi released a research note Sunday in response to Nio’s earnings, reaffirming one of the highest price targets among major Wall Street analysts.
Citi analyst Jeff Chung cut the firm’s price target on the EV maker to $8.10 from $8.90 while maintaining a Buy rating. Despite lower, the new target suggests an 80% upside from Friday’s close at $4.50.
Over the weekend, Mizuho cut its Nio target by 16% to $4.20, BofA trimmed its to $4.90, while Morgan Stanley reiterated Overweight with a $5.90 target, implying 31% upside.
The firm expects the company’s first quarter vehicle margin to decline quarter-over-quarter to 11%-12% from 13.1% due to car sales’ low season, “tepid” sales of the premium Nio brand before upgraded models launch in Q2, and lower than expected sales of the mass-market brand Onvo.
The management admitted on Friday’s earnings conference call that Q1 vehicle margin “will not be as good as you would have expected,” adding that sales of the sub-brand have “missed expectations” in the first months of 2025 as both targets of 16,000 units in January and 20,000 in March were/will be missed — according to the Q1 guidance.
“Overall speaking, the company’s vehicle margin in Q1 will not be as good as you would have expected based on our margin performance in Q4 last year. But still, our full-year target is to achieve breakeven in Q4,” CFO Stanley Qu said.
Qu added that the company is targeting a 20% vehicle margin for the Nio brand and 15% for Onvo. No margin guidance was provided for the upcoming Firefly brand.
Nio said on Friday it expects to deliver between 41,000 and 43,000 vehicles in the first quarter of the year representing a year on year growth of 36-43% but a sequential decline of about between 41 and 44% when compared to the final quarter of 2024.
Based on the guidance, March deliveries are expected to range between 13,900 and 15,900 units across both brands of the Shanghai-based Group.
Commenting on vehicle margin, Nio Group founder and CEO William Li said during the earnings call that it will ‘continue to grow’ in the second quarter of 2025, after reaching 13.1% in the final three months of last year.
“As you can see in our vehicle margin for Q4 it has fulfilled our expectation,” Li stated before focusing on the upcoming quarters. “And we will continue such cost reduction actions this year from multiple aspects, including supply chain, R&D. In that case, we foresee that our vehicle margin will also continue to grow starting Q2.”
Citi expects Nio’s earnings to improve starting in the middle of the second quarter, driven by the company’s ‘intensive’ model launches in April and May, and margin improvements from better scale effects.
