Nio's Guidance Cut Might Dampen Stock Performance, Analyst Says

Morgan Stanley analyst Tim Hsiao reiterated an Overweight rating on the shares of Nio Inc NIO with a price target of $16.10.
The electric vehicle maker lowered its Q4 FY22 guidance to 38,500 - 39,500 vehicles from the previous outlook of 43,000 - 48,000 vehicles.
The analyst said that the guidance cut mainly reflected COVID-led disruptions in deliveries/production and lingering supply constraints caused by rising COVID cases in major cities.
In the analyst's view, a guidance cut might dampen NIO's stock performance but shouldn't trigger a sharp sell-off.
Hsiao said that the fallout from China's reopening should be sector-wide and likely transitional.
The analyst expects the market to refocus on the pace of resurgence in-store traffic/order intake in the coming months.
The analyst factors solid volume growth over time and expects net profit to break even in 2024.
XPeng Inc XPEV and Li Auto Inc LI should also feel the heat, but the analyst sees relatively less downside to their more updated Q4 delivery targets of 20,000 – 21,000 and 45,000 – 48,000 units, respectively.
Also Read: Tesla Production Reports Lead To Carnage For Chinese EV Stocks As Hang Seng Tech Majors Hold It Together
Price Action: NIO shares are trading lower by 3.48% at $9.71 on the last check Wednesday.
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