Macquarie raised its price target on Nio, citing the EV maker’s improved profitability in the fourth quarter but warning that intensifying competition in the SUV segment could weigh on growth this year.
Analyst Eugene Hsiao maintained an Outperform rating on the stock, saying the fourth-quarter results showed meaningful progress on several fronts.
Vehicle margin rose to 18.1% from 13.1% a year earlier, lifted by the higher-margin third-generation ES8 launched by Nio at its annual event last September.
Research and development (R&D) spending tightened as Nio reduced headcount and targets quarterly R&D expenditure of 2.0 billion to 2.5 billion yuan going forward, according to Macquarie.
The ‘other sales’ margin — which covers services, energy, and accessories — jumped to 11.9% from 1.1% a year ago, a trajectory Hsiao expects to continue.
Positive operating cash flow, meanwhile, is helping reduce the company’s future need to raise capital.
On the negative side, Hsiao noted that management offered few specifics on upcoming margin pressures from rising battery and memory chip costs.
He also flagged that the fourth quarter’s low selling, general, and administrative expense ratio is likely a one-off, given the absence of major model launches during the period.
Macquarie expects SG&A expenses to ramp in the second quarter as the ES9 and Onvo L80 reach showrooms, though management is targeting an SG&A ratio of approximately 10% of revenue.
The firm raised its price target to $6.50 from $6.10, representing an upside potential of 14% based on Tuesday’s close.
As of press time, the stock is trading 2.1% lower on Wednesday’s pre-market session at $5.58.
Cautious on Volume
Nio‘s management reiterated a target of 40% to 50% year-on-year volume growth for 2026, underpinned by five midsize and large SUV models in the pipeline.
However, Macquarie is more cautious, pointing to the wave of new competition expected in China’s NEV SUV segment this year from Li Auto, XPeng, Xiaomi, and Seres.
Hsiao trimmed his 2026 volume estimate by 8%, citing weak first-quarter demand and low visibility into the second half given the competitive landscape.
His estimated net loss for the year narrowed to 1.8 billion yuan from 4.5 billion yuan previously, reflecting lower operating expenses and a more favourable vehicle mix.
For the first quarter, Nio guided for 80,000 to 83,000 deliveries — with the midpoint running 8% below Bloomberg consensus but 2% above Macquarie’s estimate — implying March deliveries of 33,500 units based on the midpoint of the guidance.
Revenue guidance of 24.5 billion to 25.2 billion yuan came in above both Macquarie’s and consensus forecasts.
The raised price target reflects a higher target 2026 price-to-sales multiple of 0.9 times, up from 0.8 times, bringing it in line with EV sector peers.
Hsiao identified continued ES8 backlog conversion, better-than-expected first-quarter margins, and strong pre-orders for the upcoming ES9 and Onvo L80 as potential catalysts.
Deliveries of the ES9 are scheduled to begin on the first day of June.
Nomura Upgrades to Buy
Separately, Nomura upgraded Nio to Buy from Neutral on Wednesday — its first bullish rating on the stock since June 2023 — while cutting its price target to $6.60 from $8.40.
Analyst Frank Fan said Nio is ‘finally entering into a healthy business cycle’ and now expects the company to reach non-GAAP operating profit breakeven in 2026.
Nomura projects a 25% shipment CAGR from 2025 through 2028.
BofA Raises Target, Keeps Neutral
Bank of America’s analyst Ming Hsun Lee raised his price target to $6.70 from $6.30 while maintaining a Neutral rating.
Lee described fourth-quarter revenue as ‘largely in line’ with expectations and noted the non-GAAP profit miss was partly driven by 529 million yuan in equity investment losses, a below-the-line item that weighed on the bottom line despite strong operating results.
