Mizuho Securities analyst Vijay Rakesh lowered the firm’s price target on NIO shares by $5 to $55 representing an upside potential of 237% based on the current price per share of $16.32, as of 10:31 EST. The analyst reiterated a Buy rating on the shares after the NIO’s Q1 2022 earnings results unveiled last week and expects a “production normalization” during the second half of the year.
“Despite near-term headwinds, we see NIO as well-positioned for L-T growth with secular growth and leadership in China with global expansion underway,” Mizuho analyst said.
“NIO reported an inline MarQ rev/EPS of RMB 9.9B/RMB (0.79). It guided JunQ rev lower to ~RMB 9.7B (cons. RMB 11.5B), mostly as expected, with deliveries at 24-25k units (below consensus 28.2k) due to China COVID lockdowns”, Rakesh added.
“We believe: 1) NIO sees JunQ margins softer with battery costs now pegged to commodity prices and the metals index (up ~5x y/y though raw materials prices softening), and 2) 2H production normalization as 2H deliveries could be up >80% 2H1/H with new models and capacity ramps,” he concluded.
Commenting the financial results, NIO CEO William Bin Li said that the company “witnessed robust demand for our complementary products and achieved an all-time high order inflow in May 2022″ despite the pandemic resurgence in China. For the second quarter of 2022, NIO said that expects to deliver between 23,000 and 25,000 vehicles, representing an increase of approximately 5.0% to 14.2% from the same quarter of 2021.
The company also disclosed that expects the total revenues to be between RMB9,340 million (US$1,473 million) and RMB10,088 million (US$1,591 million) in Q2, representing an increase of approximately 10.6% to 19.4% from the same quarter of 2021.
NIO will hold a conference to officially launch the new SUV model NIO ES7 on June 15, at 20:00 in Shanghai timezone. The company will start receiving reservations on the evening of the conference and the orders will start to be locked in July with the first deliveries expected as soon as the end of August.