BofA Cuts NIO Target Despite Record High Margins, Growth

Nio Inc - ADR NIO could continue to gain share in the Chinese electric vehicle market over the next couple of years, according to BofA Securities.

The Nio Analyst: Ming Hsun Lee maintained a Buy rating for Nio, while reducing the price target from $63 to $60.

The Nio Thesis: The company’s gross processing margin (GPM) hit a record high in the first quarter, driven by higher contribution from EC6, a higher take rate of the 100kWh battery pack and NIO Pilot, as well as a lower bill of material (BOM) cost, Hsun Lee said in the note.

“NIO has kicked off the planning and building of a new plant in Xinqiao Industrial Park in Hefei with its strategic partners. Hefei government will invest in Neo Park, which will support up to 1mn units of EV and 100GWh battery capacity in Neo Park. NIO will be one of the major EV companies and continue to do contract manufacturing with JAC,” the analyst wrote.

While raising the sales estimate for 2021 by 5%, Hsun Lee cut the 2022 estimate by 1% to reflect the “potential impact on production from chip shortage.”

NIO Price Action: Shares of Nio had risen by 3.46% to $40.35 at the time of publication Friday afternoon.

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