Why Nio Is A Top Pick At Deutsche Bank: 'Narrative Shifts From Supply Constraints To Product Supercycle'

Nio, Inc. NIO has a lot riding on a trio of new products in 2022, according to a Deutsche Bank analyst. 

The Nio Analyst: Deutsche Bank analyst Edison Yu reiterated a Buy rating and $50 price target for Nio shares. The analyst also named Nio as his top pick.

The Nio Takeaways: Nio has embarked on the most important product cycle in its history, Yu said in a Thursday note following an investor meeting with the management.

After stagnant volume for the last few quarters due to operational bottlenecks, deliveries are on track to increase from 10,000 to at least 25,000 exiting 2021, the analyst said. This will shift the narrative away from supply constraints to a product supercyle, he said. 

"Critical to this, Nio's ET7 and ET5 are set to be the most desired cars in the China market this year, potentially representing category defining products for what many see as an increasingly competitive market," Yu said.

Related Link: Nio Analyst Predicts Over 200% Upside For Stock: 'EV Maker Has Clear Growth Prospects In 2022'

Nio has materially increased the resilience of its supply chain while also aggressively investing to deliver top-notch premium experience, the analyst said.

Nio is planning to maintain sales of existing models at 10,000 units per month and ramp up the ET7 by about 1,000 units incrementally every month, implying second-quarter volume of 36,000 units, he said.
In the third quarter, ET7 sales are likely to reach 4,000 to 5,000 units, Yu said. 

The ES7, built at Nio's existing Hefei plant and due for deliveries in August, will ramp up to 4,000-5,000 units by year-end, the analyst said.

The midsize ET5 sedan, built at the new NEO Park Plant and due to begin deliveries by September, is expected to be targeting a per-month rate of 10,000 units within three to fourth months of launch, he said. 

For 2022, Deutsche Bank estimates sales of 170,000 units, an increase of 86%, with deliveries nearly doubling to 320,000 units in 2023. 

NIO Price Action: Nio shares were slipping by 3.86% to $21.32 Thursday afternoon, according to Benzinga Pro. 

Photo courtesy of Nio.