Nio Stock (NYSE:NIO) is once again gaining momentum on Wallstreet after a 3 month downtrend, with Nio shares gaining 18.03 percent over the past month. The swing in investor sentiment has been driven by multiple catalysts, including a boosted price target from Deutsche Bank analyst Edison Yu. The boosted valuation came as a surprise to investors, especially following Nio’s 65% decline in monthly vehicle deliveries in October.
Nio delivered 3,667 vehicles in October, which was significantly lower due to interrupted production. During October, NIO allocated their resources towards restructuring and upgrading manufacturing lines to prepare for the production of new vehicle models. Analysts are confident that NIO deliveries will bounce back next month.
Deutsche Bank sees Nio recovery as catalyst in Q4
On Thursday, Deutsche Bank analyst Edison Yu raised the firms Nio stock price target to $70 a share. The analyst told investors that he expects monthly sales/deliveries to bounce back to September levels. Furthermore, Yu added that he expects the Q4 delivery guidance to improve to 24,000-25,000 vehicles.
Deutsche Bank’s target price represents a 66.7% upside from the current trading price, making it the second highest institutional valuation behind Citi, with analyst Jeff Chung setting a $72 valuation. Jeff Chung shares a similar bullish sentiment towards Nio stock, with the analyst expecting 93,000 vehicle deliveries for 2021. The company has already delivered just shy of 70,000 vehicles this year. However, it means Nio will need to deliver 23,000 vehicles in the last two months of 2021 to meet Chung’s target.
Electric Vehicle adoption in China set to benefit domestic pioneers like Nio
Despite the companies lowered October deliveries, Wallstreet institutions such as Deutsche Bank and Citi remain focused on the EV transformation in China. EV adoption continues to gain momentum across the developing world, with China expected to lead the charge alongside Europe and North America.
Piper Sandler analyst Alexander Potter believes that EV’s will represent 18% of new vehicle sales by 2025. This transition is expected to benefit well established EV manufacturers such as Tesla and Ford. However, with Government regulation in the Chinese EV market, we can expect domestic companies such as Nio, Xpeng and Li Auto to be the beneficiaries. By 2040, Potter sees EV’s potentially taking up 94% of all vehicles sales, highlighting the lucrative nature of the EV market which is expected to blossom over the next 20 years.
Final Thoughts – Deutsche boosts Nio Stock Price Target
Overall, the boosted target from Deutsche Bank highlights the analysts confidence in a Nio recovery over the last quarter of the calendar year. Yu expects the company to deliver 24,000-25,000 vehicles in Q4 despite the sharp decline in October. Nio plans to release its Q3 results on November 9, with Wallstreet expecting the company to generate $1.45 Billion in revenue for the quarter.
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