Written by Cláudio Afonso | LinkedIn | X
Morgan Stanley analyst Tim Hsiao published a new research note on EV maker Nio on Friday, immediately after the company reported its fourth-quarter earnings, reaffirming a bullish price target on the stock.
The analyst reiterated an Overweight rating and a $5.90 price target on the Shanghai-based EV manufacturer implying an upside potential of 31% based on the current trading price of $4.50.
In a new research note, the analyst said the net loss came in higher than the firm’s forecast while noting that revenue was “in line with the low end of company guidance” of between 19.7 billion and 20.4 billion.
“Nio reported a net loss of Rmb7.1bn in 4Q24 (vs. Rmb5.1bn loss in 3Q24), higher than our expectation of a Rmb5.8bn loss. Full-year losses arrived at Rmb22.4bn vs. 20.7bn in 2023,” Hsiao wrote. “Overall revenue grew 6% QoQ to Rmb19.7bn in 4Q, in line with the low end of company guidance of Rmb19.7-20.4bn.”
In a statement, Nio said it expects its financial resources to be sufficient to support its operations over “the next twelve months.”
“Based on our going concern and liquidity assessment, which considers our business plan including revenue growth, working capital management and the ability to raise funds from banks under available credit quotas when needed, we believe that our financial resources, including our available cash and cash equivalents, restricted cash and short-term investments, cash generated from operating activities and funds from available credit quotas will be sufficient to support our continuous operations in the ordinary course of business for the next twelve months,” Nio stated.
The company reported a 15.2% increase in revenue for the fourth quarter, while net losses widened to 7.11 billion yuan ($0.98 billion), and vehicle margin rose year over year to 13.1% from 11.9%, remaining flat compared to the previous quarter.
“While the vehicle gross margin of 13.1% (flat QoQ) fell shy of MSe 14.1%, the non-vehicle GPM surprisingly turned positive and advanced group GPM to 11.7% (+1ppt QoQ), in line with MSe 11-12%.
Hsiao noted that the “opex ratio was largely steady” with R&D expenses jumping 10% from the third quarter and Selling, General, and Administrative expenses (SG&A) grew 19% sequentially “amid Onvo’s channel expansion.”
“Of note, Nio booked a Rmb528mn non-operating loss in 4Q, largely reflecting losses from revaluation of its overseas RMB-related assets, per the company,” the analyst wrote.
For the first quarter of the year, said it expects to deliver between 41,000 and 43,000 vehicles in the first three months of 2025. The company delivered 13,863 units in January and 13,192 in February under its Nio and Onvo brands, bringing total deliveries to 27,055 as of February 28.
Based on the full-quarter forecast, Nio expects to deliver between 13,945 and 15,945 vehicles in March—well below previously communicated targets of 20,000 deliveries in March for the Onvo sub-brand alone.
Morgan Stanley noted that March estimates imply a “moderate uptick of 13.6-14.6k units for March (vs. 13.5k monthly average in Jan/Feb)” while revenue guidance “suggests a low-teen sequential ASP uptick in 1Q.”
The analyst also said “all eyes remain on the NT 3.0 facelifts for the Nio brand and, to a greater extent, the restructuring for cost reduction” referring to the ongoing cost-cutting measures.
Starting from April and throughout the year’s end, the Group will start delivering several new models and refreshed versions across the three brands Nio, Onvo and Firefly.
Earlier this week, the company announced the extension of the partnership with the battery giant CATL into the battery swap business. CATL is also investing up to 2.5 billion yuan ($346 million) in Nio Power, the charging and battery swap unit of the EV maker.
