Morgan Stanley maintained its bullish outlook on Chinese EV maker Nio after the company reported narrowing losses and widening margins for the third quarter on Tuesday.
In a research note, the analyst Tim Hsiao highlighted the lower net loss, which came in better than Morgan Stanley’s estimates due to higher gross profit margins.
“Nio reported a narrowing net loss of Rmb3.7bn in 3Q25 (vs. Rmb5.1bn in 2Q25), better than MSe of an Rmb4.3bn loss thanks to better GpM [Gross Profit Margins],” Hsiao wrote.
Price Target and Stock Performance
In the research note first obtained by PriceTarget, Morgan Stanley reaffirmed the Overweight rating on the stock while maintaining its $9.00 price target.
Based on Nio‘s latest closing price of $5.75, Morgan Stanley’s target implies an upside potential of 56.5%.
The company’s US-listed shares have risen nearly 26% year to date.
The stock faced a tough first half of the year and reached a new five year low in July at $3.02.
In the following weeks and months — and amid the release of new models and surging demand — the stock has sharply bounced to just above $8 in early October.
Higher than Expected Margins
Vehicle gross margin has also “edged up” to 14.7%, above the firm’s estimates of 13%.
The analyst said the better than expect margin was “likely” due to “scale benefits and higher margins of new launches (Onvo L90/Nio ES8) offset ongoing promotions.”
Nio reported an overall gross profit margin of 13.9%, 3.0 percentage points above Morgan Stanley’s estimates.
Hsiao noted that Nio‘s revenue guidance for Q4 — which was announced amid a trimmed vehicle delivery guidance — suggests a high single digit sequential ASP expansion in 4Q, likely reflecting a higher mix of ES8/Onvo L90 sales.”
“Nio guided 120-125k for 4Q volume, (vs. MSe of 150k) implying an average of 40- 42k in Nov/Dec vs. 40k in October,” the analyst wrote.
Profitability Target Unchanged
Despite cutting its fourth quarter sales guidance by about 20%, Nio‘s founder and CEO William Li said the goal of posting the first ever profitable quarter in Q4 was still on the table as the EV maker sees increased share from higher-margin models such as the ES8 and the L90.
As of press time, Nio shares were trading 4.6% lower at $5.49.
