NIO Stock Strings Together Two Good Days. Here's Why. -- Barrons.com
DOW JONES & COMPANY, INC. 1:29 PM ET 5/3/2021
Shares of Chinese electric vehicle maker NIO extended their winning streak Monday to two consecutive days, bolstered by better-than-expected earnings and a more bullish take from Wall Street.
NIO stock was up 3.1%, to $41.13, in early trading Monday. The S&P 500 and Dow Jones Industrial Average were up 0.4% and 0.8%, respectively.
NIO posted first-quarter results late Thursday, delivering solid numbers. CEO William Bin Li pointed out that the company set a quarterly delivery record of 20,060 vehicles but will face "significant challenges" in the second quarter because of the global automotive semiconductor shortage.
Mizuho analyst Vijay Rakesh isn't focusing not on the chip shortage. He's taking notice of NIO's stronger-than- forecast profit margins and plans for future capacity. The company announced this past week that it is participating in NeoPark, an industrial complex built in part by the government, that will eventually have the capacity to manufacture 1 million EVs annually. In a Sunday research report, Rakesh raised his price target to $65 a share from $60. He rates NIO shares Buy.
J.P. Morgan analyst Nick Lai, in a Friday research report, called NIO's results "a clean beat in the midst of industry headwinds." He noted that sales grew faster than unit deliveries because of higher-priced features such as a larger battery pack and upgraded driver assistance functions. Lai also rates shares Buy. His price target is $70 a share.
Morgan Stanley analyst Tim Hsiao rates share Buy; his price target is $64 a share. He was encouraged by management comments that orders grew nicely in April, but expressed some concern about semiconductor-induced production bottlenecks. "Previous production suspension may dent near [term] deliveries, making [the second quarter] more back end loaded," wrote Hsiao in a Friday report.
For investors, that means they should brace for sequentially lower deliveries in May. NIO delivered more than 7,100 vehicles in April.
Most analysts who cover NIO stock -- 67% -- rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is roughly 55%. The average analyst price target, however, implies huge gains. Analysts think NIO stock is worth about $ 58 a share, up 42% from recent levels.
The high target prices are, in part, a legacy of recent trading action. NIO stock has had a difficult 2021, down about 16% year to date. And shares are down about 39% from their January 52-week high of almost $67 a share. Higher interest rates, new competition and the global automotive semiconductor shortage have hurt investor sentiment.
(END) Dow Jones Newswires
05-03-211329ET
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