Nio Analyst Sees This One Catalyst Driving Growth, Ups Price Target

Nio Inc - ADR NIO's November deliveries rebounded strongly from the previous month's lean patch, even as the company is on the cusp of capitalizing on a host of upcoming catalysts.

The Nio Analyst: Morgan Stanley analyst Tim Hsiao maintained an Overweight rating on Nio shares and increased the price target from $64 to $66.

The Nio Thesis: Nio shares have lagged peers in the year-to-date period, as growth stalled due to component crunch, plant restructuring and a lack of new products, analyst Hsiao said in a note.

Market expectations and forecasts are now more rational than earlier this year, the analyst pointed out.

"It's time to look ahead," the analyst said.

The upcoming ET7 sedan successfully rolled off the assembly line on Nov. 29, Hsiao noted. The successful pre-production allows Nio up to a three-month lead time to ramp up output and prepare for manufacturing necessities, the analyst said.

"More punctual delivery of ET7 would also reinforce investors' confidence in the ET5 launch," Hsiao wrote in the note.

Related Link: Nio And Shell Join Forces To Expand EV Charging: What You Need to Know

Policy direction, the analyst said, will gradually shift from qualitative targets to more quality upgrades. NEV penetration is already tracking ahead of the 2025 target of 20%, he added.

"We believe Nio is one of the key players that could continue to enjoy this structural tailwind with EV development still anchoring China's economic agenda in 2022," the analyst said.

The company has a broader range of capabilities beyond the cars and superior branding, covering software, services, energy solution and so on, he added.

Following the record monthly deliveries for November, Morgan Stanley raised its sales volume forecasts for 2021-30 by 8% to 37%. The firm expects more notable volume growth from 2023, fueled by the sales ramp-up of new model launches in 2022 and from the launch of a mass-market brand.

The inauguration of a new model cycle in 2022 powered by the NT2.0 platform will likely accelerate growth at Nio in the coming years, the firm added.

Nio Price Action: Nio shares were down 2.64% at $37.30.

Related Link: Nio Reports Q3 Beat Despite Supply Challenges, Below-Consensus Q4 Guidance And Confirms Launch Of 3 New Models In 2022

Photo: ET7 via Nio