Written by Cláudio Afonso | LinkedIn | X
JP Morgan analyst Nick Lai upgraded the firm’s rating on Nio shares from Underweight to Neutral while raising the price target from $4.80 to $5.40.
The analyst highlighted the volatility in the stock over the last months as the company introduced lower prices for the battery swap fee in China. As of the time of writing, Nio shares are trading 9.24 percent lower at $5.27 per share.
“We downgraded Nio to Underweight in February on reservations that the company’s slow sales momentum could weigh on profitability, leading to consensus earnings/revenue downgrades,” Nick Lai introduced.
“Since February, Nio’s share price has been on a roller-coaster ride, falling 40 percent towards the trough in mid-April (vs MXCN down 1%) and then rebounding by a similar amount afterward (vs MXCN up 16 percent),” he noted.
In a new research note, the analyst cites the Chinese government’s stimulus policy and the lowered prices of Nio’s battery swap fees in China as the two main positive developments.
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“Two new developments in the past month lead us to believe that a revisit of our thesis is warranted: 1) Chinese government stimulus policy to boost auto demand including NEV which Nio should also benefit from; and 2) Nio’s latest battery as a service (BaaS) strategy by lowering buyers’ monthly rental fee (by ~25%) has not only successfully boosted store traffic and BaaS take rate (to 60-70% from previous 20-30%) but also driven its sales momentum as buyers effectively pay Rmb70k less with the BaaS program (and it doesn’t affect Nio’s revenue given that BaaS is provided by NIO’s 19%-owned subsidiary),” JP Morgan analyst explained.
We lift our 2024/25 volume estimates moderately by 9-11 percent but point out that our GPM and bottom-line estimates remain below the Street’s. Incorporating our earnings revisions, our Dec-24 price target rises to US$5.40.”
Earlier today, Nio officially unveiled its subbrand named Onvo with the pre-sale price of its first model starting at 219,900 RMB, 30,000 RMB lower than the Tesla Model Y.
Customers can currently deduct 6,000 RMB off the vehicle price by placing a 2,000 RMB deposit, while deliveries start in the third quarter of the year.
“L60 will provide mainstream family users with vehicle experiences of premium quality,” the brand stated in the release.
To further promote sales among Nio customers, Nio CEO William Li announced on the Nio App that brand users who purchase the Onvo L60 will receive 30,000 points upon delivery, while ES8 Founder Edition users will receive 50,000 points upon delivery.
Written by Cláudio Afonso | LinkedIn | X
