MorningStar maintained its $5.30 price target for Nio on Wednesday, saying the Chinese electric vehicle maker’s shares are “fairly valued” after rising more than 50% over the past six months.
Senior equity analyst Vincent Sun said Nio‘s third-quarter revenue of $3.061 billion slightly missed the low end of guidance.
The Group’s average vehicle prices declined 18% to a new low due to price competition and the introduction of cheaper sub-brands Onvo and Firefly.
Vehicle volume grew 41%, helping push vehicle operating margin back to the mid-teens level for the first time in three years.
“With Nio‘s ADS price up over 50% in the past six months, shares are fairly valued in 3-star territory,” Sun wrote in a research note.
Based on Tuesday’s closing price of $5.50, MorningStar’s reaffirmed target represents a downside of 3.6%.
The stock closed 4% lower on Tuesday after the company lowered its fourth-quarter delivery guidance to between 120,000 and 125,000 vehicles, down from a previous target of 150,000 units.
Subsidy Impact
Nio‘s management attributed the guidance reduction to the cancellation of trade-in subsidies in certain cities, which indicates an increasingly uncertain outlook for demand.
The midpoint of the guidance implies December monthly deliveries of around 42,000 units, slightly below market expectations, Sun stated.
Despite the lower volume guidance, management reiterated its target to break even on a non-GAAP basis in the fourth quarter as economies of scale take effect and expenses taper off.
The company expects vehicle margin to reach 18% in the fourth quarter and 20% in 2026, above MorningStar’s forecast of 18%.
Chief Financial Officer Stanley Yu said during the earnings conference call that the 20% vehicle margin target will be “actually partially driven by the economies of scale on the supply side” as improved sales volume helps optimize amortized manufacturing costs per unit.
2026 Outlook
As orders and production of the Onvo L90 and ES8 models ramp up, Nio expects monthly vehicle sales volume to reach 50,000 units “sometime” in the first half of next year.
At the first-quarter earnings call in June, Chief Executive Officer William Li had set a goal of selling 50,000 vehicles per month in the fourth quarter, including 25,000 from the Nio brand and 25,000 from Onvo.
Sun said Nio believes the partial withdrawal of China’s purchase tax waiver next year would have a lesser impact on the company than its peers, as battery rental vehicles incur lower tax bills.
“We keep our forecasts unchanged and maintain our fair value estimate at $5.30 per ADS, which implies 0.8 times 2026 price/sales,” Sun wrote.
US-listed shares of Nio are up 25% year to date despite declining 32% since reaching a 2025 peak of $8.02 in early October.
Wall Street Reactions
US Tiger Securities maintained a Buy rating and $8 price target, with analyst Bo Pei saying Nio is entering a stronger product cycle that should drive improved profitability despite near-term delivery headwinds.
Based on Tuesday’s closing price, the target implies an upside potential of 45.5%, making it one of the more bullish outlooks on Wall Street.
Macquarie downgraded Nio to Neutral from Outperform and cut its price target to $5.30 from $6.70, turning bearish on the stock.
Bank of America cut its price target to $6.70 from $7.60 while maintaining a Neutral rating, saying the stock has already priced in improving margins.
