Despite periods of relief, hampered by supply-chain issues and China’s zero-Covid policies, NIO (NIO) shares have been on an almost constant downtrend all year.
That said, with the year’s end clearly in view, Deutsche Bank analyst Edison Yu sees a number of potential “positive developments” ahead for NIO, and these form the basis for a “short-term investment idea.”
So, what are these positive developments to look forward to? Well, for one, while so far December’s weekly registration data has come in “soft,” for the rest of the month, Yu expects delivery volume to “ramp up considerably.” NIO said it manufactured its 300,000th vehicle on Monday and that in the next 2-3 weeks the car should be delivered.
“Considering cumulative deliveries were 274,000 exiting Nov,” Yu explained, “this suggests production is ramping up nicely and 4Q guidance is very much achievable (43,000-48,000 units).”
Furthermore, on December 24, NIO will host its annual “NIO Day” when two new models will be unveiled. According to Yu, these should be the revamped ES8 and EC7 SUVs which will take the place of the current first-gen models and should be “well received by consumers.”
There should also be more good news on the relaxing of China’s stringent zero-Covid polices, with Yu anticipating more loosening of travel movement. This should go toward helping sentiment. Sentiment could also potentially get a boost from a “final resolution from the US PCAOB (the Public Company Accounting Oversight Board) on the audit standards for China-based companies listed in the US.”
So, based on the above, Yu has issued a Catalyst Call, telling investors to Buy NIO shares ahead of these events. Short-term view aside, the analyst rates the stock as a Buy, and has a $21 price target in mind. Should the figure be met, investors will be sitting on returns of ~77% a year from now. (To watch Yu’s track record, click here)
Most analysts join Yu in the bull-camp. With 7 additional positive reviews pitted against 4 skeptics, NIO stock claims a Moderate Buy consensus rating. The average target currently stands at $16.81, suggesting an upside potential of ~42% for the year ahead. (See NIO stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
