Morgan Stanley analyst Tim Hsiao released a new note on NIO stock believing the share price “will rise in absolute terms over the next 15 days” and also predicting the vehicle margin to decrease on the second quarter and rebound to “~18-19% in the second half of the year”.
“We believe that if the company can report a solid sales bounce of 11-13k in June, this should help NIO restore investor confidence. It could also further support the shares ahead of an intense delivery schedule starting from August,” Hsiao wrote. Morgan Stanley remains positive on NIO believing that the company’s vehicle margin will “hit a trough of ~15.5% in Q2 2022 but rebound to ~18-19%” in the second half of 2022.
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“We believe the share price will rise in absolute terms over the next 15 days. NIO’s H shares underperformed HSCI Index by 9% and ADS fell 8%+. This is despite a bounce during trading hours on June 29 that narrowed the ADR loss to 2%, vs. a largely flat NASDAQ, during the latest trading session due to the general correction across China’s auto sector after the recent rally.
While sluggish industry sentiment resulted in the sell-off, we believe NIO’s upbeat June sales together with good volume trajectory into 2H, aided by a strong product pipeline, will revive investor confidence in the company’s operations and trigger a rebound in the stock. We estimate that there is about a 70% to 80% (or “very likely”) probability for the scenario,” the analyst concluded.
JP Morgan analyst Nick Lai issued a note on Wednesday about NIO after the short seller report released by Grizzly Research on Tuesday. The analyst explained that this system used by NIO and Weineng is similar to the one used by OEMs when it comes to vehicle financing and that “every battery held by Wuhan Weineng has a corresponding underlying subscriber”.