Japan’s largest brokerage upgraded Nio to Buy on Wednesday, its first bullish call on the Chinese electric vehicle maker in nearly three years, after the company posted its first-ever quarterly profit and delivered fourth-quarter results that exceeded guidance.
Nomura analyst Frank Fan raised the rating from Neutral to Buy while cutting the price target to $6.60 from $8.40.
The new target implies roughly 16% upside from Tuesday’s closing price of $5.70, when the stock surged more than 15% — its biggest single-day rally in a year — after the earnings report.
Nio is ‘finally entering into a healthy business cycle,’ Fan wrote in a research note.
The analyst said the company has improved from both a business and financial perspective over the past two quarters and now expects Nio to reach non-GAAP operating profit breakeven in fiscal 2026.
What Changed in the Model
Fan cut shipment forecasts for 2026 and 2027, citing the challenging competitive environment in China and Nio‘s product launch schedule, but still projects a 25% compound annual growth rate in deliveries from 2025 through 2028 and a 21% revenue CAGR over the same period.
The margin picture drove much of the upgrade.
Nomura raised its 2026 gross profit margin estimate by 0.7 percentage points and its 2027 estimate by 1.1 percentage points.
Operating profit margin estimates rose more sharply — up 3.3 percentage points for 2026 and 3.2 percentage points for 2027 — with Nomura saying it reflects Nio‘s steeper-than-expected compression in operating expenses relative to its expanding revenue base.
The $6.60 price target is based on a discounted cash flow model using a weighted average cost of capital of 11.4%, a beta of 1.0, and a terminal growth rate of 1.5%.
The target implies a 2026 price-to-sales multiple of 0.9 times, compared with the stock’s current multiple of 0.7 times.
A History of Catching Up
Nomura’s relationship with Nio‘s stock tells a story of a brokerage that has repeatedly lagged the market’s direction.
In March 2022, analyst Martin Heung held a Buy rating and a $51.50 price target — implying 158% upside from the roughly $20 level where Nio was trading at the time.
The stock had already fallen more than 70% from its all-time high of $66.99, reached in January 2021 during the peak of the global EV valuation bubble.
That record high came amid Nio‘s unveiling of the ET7 sedan — its first-ever sedan and first model built on its second-generation vehicle platform — alongside plans to expand to 25 countries and regions by 2025, including the United States.
Founder and CEO William Li visited San Francisco in August 2022 to scout a location for a Nio House flagship showroom, as EV reported at the time.
The US market was central to the growth narrative that underpinned analyst valuations in that era.
Nomura’s $51.50 target proved vastly disconnected from reality.
The stock never recovered. It fell through $10 by mid-2023, slid below $5 by late 2024, and eventually hit a five-year low of $3.02 in mid-2025 — a 95% decline from the January 2021 peak.
The US expansion was quietly abandoned. As EV reported exclusively in June 2025, Nio ousted its chief business officer for the US market, effectively halting any plans to sell vehicles directly in the country.
In June 2023, with the stock trading around $8.89, Nomura downgraded Nio from Buy to Neutral and slashed its target to $7.50 from $25.80.
The downgrade marked the end of a bullish stance the bank had held through the entire multi-year decline from the 2021 peak.
Nomura would not return to a Buy rating for nearly three years.
By March 2025, the bank had cut its target again to $5.00 from $7.50. The stock was trading around $3.50 to $4.00 at the time — near the bottom.
In September 2025, following Nio‘s annual event where it launched the third-generation ES8 SUV and opened orders that quickly surpassed 100,000 units, Nomura raised its target by 68% to $8.40 but kept its Neutral stance.
The bank maintained the $8.40 target through early February, even as the stock pulled back sharply to the $4.50 area.
In a note at the time, Nomura said concerns about Nio‘s performance were ‘overdone’ — yet still declined to upgrade the rating.
Wednesday’s move to Buy at $6.60 marks the first time since June 2023 that Nomura has held a bullish rating on Nio.
However, the upgrade arrives with a lower price target than the one the bank maintained throughout the recent pullback.
The Earnings
Nio reported fourth-quarter 2025 revenue of 34.7 billion yuan, up 76% year on year and 59% quarter on quarter.
The growth was driven by a 72% increase in vehicle delivery volumes alongside a 5% year-on-year and 15% quarter-on-quarter rise in average selling price, reflecting a product mix increasingly weighted toward the high-margin third-generation ES8 SUV.
The company posted GAAP net profit of 282.7 million yuan — its first positive figure on that measure in a single quarter since listing in 2018.
Non-GAAP net profit reached 728 million yuan, swinging from a loss of 6.5 billion yuan a year earlier.
Operating income came in at 807 million yuan, above the preliminary guidance range of 200 million to 700 million yuan issued on February 5.
Nio‘s chief financial officer said on the earnings call that vehicle margin is expected to hold at a similar level in the first quarter.
The operating expense ratio fell to 15.2% of revenue, down 27.1 percentage points year on year, as R&D spending and selling, general, and administrative costs declined relative to the rapidly expanding revenue base.
First-Quarter Guidance
For the first quarter of 2026, Nio guided for 80,000 to 83,000 vehicle deliveries — implying year-on-year growth of 90% to 97% — and revenue of 24.5 billion to 25.2 billion yuan, which would represent growth of 103% to 109% year on year.
The revenue guidance exceeded the analyst consensus of 23.3 billion yuan.
The delivery forecast implies between roughly 32,000 and 35,000 vehicles shipped globally in March, following 27,182 in January and 20,797 in February.
Other Analyst Reactions
Nomura was not the only firm to respond to the results.
Bank of America’s analyst Ming Hsun Lee raised his price target to $6.70 from $6.30 while maintaining a Neutral rating.
Lee described revenue as ‘largely in line’ with expectations and noted the non-GAAP profit miss was partly attributable to 529 million yuan in equity investment losses — a below-the-line item that dragged on the bottom line despite strong operating results.
As of publication, Nio‘s US-listed shares were trading around $5.53, down approximately 3% from Tuesday’s close.
