Deutsche Bank analyst Vincent Ha released a new note on Monday lowering the firm’s price target on NIO shares to $39 from $45. The analyst maintaining a Buy rating on the shares while reiterating the company as their “top China EV pick”.
The firm estimates the EV maker to deliver 30,500 units which results in a total of 20,448 vehicles delivered in August and September, a monthly average of 10,224.consensus estimates for 3Q/4Q clearly need to come down, we do see this as the last reset before the product supercycle hits full stride”.
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The analyst said it expects “a mostly in-line quarter with investor attention focused on the second half outlook, following weak guidance from both LI/ XPEV”.
During the Q2 Earnings Results presentation, XPeng said it expects to deliver between 29,000 and 31,000 vehicles in the third quarter (down from the 34,422 in Q2) while Li Auto estimates to deliver between 27,000 and 29,000 vehicles after delivering 28,687 in Q2.
Deutsche Bank said the investors are “generally already prepared for soft near-term sales” adding that the company “just needs to show that demand for existing models is not totally falling apart and the casting parts bottleneck will be resolved soon”.
“Beyond that, NIO is on track to move further into Europe with management confirming a separate NIO Day in Europe next quarter which could help sentiment. Overall, we reiterate NIO as our top China EV pick. In addition to the product cycle, we believe the company’s efforts around battery swapping, user experience, and internal battery cell development go very much underappreciated and will eventually show clear differentiation as the local Chinese market gets increasingly more competitive,” the analyst wrote.
On Sunday, NIO delivered the first units of its new SUV NIO ES7 only seventy-five days after the official launch on June 15. At the time, the EV maker also confirmed the highly anticipated 2022 versions of the older models, including the ES8, ES6, and the EC6.