Nio Inc – (NYSE: NIO) has continued to outperform analysts expectations this year as the Chinese EV continues to deliver strong revenue growth. The companies stock price has seen a remarkable gain of 2,500% over the past year. The trading activity has seen a spike in recent days after the Q3 earnings announcement alongside the bullish BOA analyst upgrade. This article will breakdown the key analysts price targets and guidance from the Q3 earnings for NIO investors moving into 2021.
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Key price targets from analysts moving into 2021
The general consensus amongst analysts has significantly improved over the course of the past few months. Goldman Sachs downgraded their NIO rating to a sell in July this year, pricing the company at a meer $7 a share. Fast forward a few months and larger institutions are chasing their tail to increase the price targets on this stock. Below are the more recent key 12 month price targets from analysts:
- 11/18/2020 Bank of America – BOA analysts boosted the 12 month price target from $23 to $54.70 a share. Analyst Ming-Hsun Lee boosted the price target 19% above the current trading price.
- 11/9/2020 JP Morgan Chase & Co – the institution boosted their price target from $40 – $46 a share. The company at the time was trading around $40 which suggested 15% upside potential.
- 11/4/2020 Smith Barney Citigroup – increased the 12 month price target from $33.20 to $46.40 a share. This upgrade had a strong impact on the NIO stock price, as investors quickly bought up stock at sub $40 pricing.
- 11/3/2020 Deutsche Bank – The bank reiterated their buy rating at $34 a share whilst the company was trading within the $30-$40 band.
What do these price targets translate for investors?
The general consensus across the board of analysts from larger institutions remains an average hold rating. However, the month of November has seen 4 updated ratings of which all suggested a buy rating. This shows NIO investors larger institutions are beginning to swing their sentiment towards a more bullish outlook for 2021. The Bank of America upgrade was the first target above $50, which suggests BOA are confident the stock has room to grow in the next 12 months.
What to take from NIO’s Q3 earnings
The key focus on both US and Chinese EV manufacturers is on the delivery numbers. NIO posted an impressive 12,206 deliveries for this quarter, outdoing Li Auto and XPeng. This was an increase of 18% from the previous quarter. The companies revenue posted an impressive US $666.6 million for the quarter, a 21.7% increase from the previous quarter. More impressively was the increase in vehicle margin at 14.5%, a 9.7% increase from the second quarter of 2020.
“We achieved a new record-high quarterly deliveries of 12,206 ES8s, ES6s and EC6s in total in the third quarter of 2020, followed by the best-ever monthly deliveries of 5,055 vehicles in October… In view of the growing market demand for our competitive products, we are motivated to continuously elevate the production capacity to the next level. We expect to deliver 16,500 to 17,000 vehicles in the coming fourth quarter.”William Bin Li, founder, chairman and chief executive officer of NIO
Guidance provided from the Q3 earnings
The guidance provided from NIO for the Q4 to be released in 2021 alongside longer term outlook appears extremely positive. The key guidance is listed below.
- 16,500 to 17,000 vehicles expected to be delivered in Q4
- Q4 revenues expected to reach US $921.8 million between US $947.9 million representing, an increase of approximately 38.3% to 42.2% from the third quarter of 2020.
- Analysts predict revenues for 2021 to reach $4.52 Billion which will double the annual revenue from 2020.
I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.
In conclusion, the past month has seen analysts shift their sentiment towards the outlook on NIO stock. The strong guidance from the Q3 earnings is definitely a driving force for the bulls moving into 2021. In my opinion, the BOA boosted price target well above the current trading price may push the stock higher. Investors will generally look at BOA price targets as a conservative measure of pricing in 12 months. However, its important to note external factors may play an influential role in NIO’s performance. All risks associated with NIO should always be analysed and priced in with your risk strategy.
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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.