Nio shares should find near-term support from stronger vehicle sales and improving profitability, Morningstar analyst Vincent Sun said in a new research note following news of a lawsuit filed against the EV maker.
Sun first initiated coverage of Nio in July 2022 with a $27 target — then representing an upside potential of 31% when the shares were trading at $20.60.
Since that time, the stock has fallen about 67% and the 12-month price target from Morningstar is now 80% lower.
The company, founded and led by William Li, aims to post its first profitable quarter in the current period.
The goal, which is highly anticipated by retail and institutional investors, is largely driven by a sharp increase in vehicle deliveries and earlier reductions in fixed costs and research and development expenses.
After delivering 87,071 EVs across its three brands in the third quarter of the year, the management said in early September it expects to nearly double the quarterly output to 150,000 units between October and December.
Despite the sharp rise, the target is not enough to take the full year deliveries to the 440,000 units initially planned.
With 150,000 EVs delivered in the fourth quarter, 2025 figures would stand at 351,221 units — about 90,000 vehicles below the target set late last year.
Nio’s Hong Kong-listed shares fell on Thursday after Singapore’s sovereign wealth fund GIC filed a lawsuit in the US against the company, Li, and former chief financial officer Steven Feng, alleging they inflated the value of Nio’s securities.
While the allegations dent confidence in Nio’s corporate governance, Sun said he does not expect the legal action to materially affect the company’s production of its flagship SUV ES8 or the new Onvo L90 under its family-oriented sub-brand.
“This matter is not a newly occurring incident, nor is it directed at Nio’s recent operational performance,” the company said in a statement shared with EV.
“It stems from false allegations made by short-selling firm Grizzly Research LLC against Nio in a short-selling report released in June 2022,” it added.
Morningstar maintained its $5.30 price target on Nio’s US-listed shares, implying a 22.4% downside from Thursday’s close of $6.83.
The firm set a target of HK$41.60 for the company’s Hong Kong-traded stock, which rose 2.5% to HK$50.50.
