On Friday, Mizuho Securities adjusted its outlook on NIO Inc., a China-based electric vehicle manufacturer, reducing the price target on the company’s shares from $5.00 to $4.20 while keeping a Neutral rating on the stock. The adjustment follows NIO’s recent financial performance report and future guidance, which indicated weaker-than-anticipated results and projections. According to InvestingPro data, NIO currently maintains a market capitalization of $9.9 billion, with its stock showing significant volatility with a beta of 1.8.
NIO disclosed its December quarter revenue and earnings per share (EPS) at RMB 19.7 billion and RMB (3.45) respectively, falling short of the consensus estimates which had been set at RMB 20 billion and RMB (2.59). Additionally, the company’s guidance for the March quarter was set at approximately RMB 12.6 billion in revenue, a figure significantly below the consensus of RMB 22.5 billion. InvestingPro analysis reveals the company’s challenging financial position, with a gross profit margin of just 8.65% and negative earnings of $1.52 per share over the last twelve months. The projected vehicle deliveries for the same period were also reduced to 42,000 units, marking a steep decline from the expected 65,000 units—a 42% decrease quarter over quarter.
Mizuho’s analyst cited several key points in their commentary, noting the weaker guidance for March quarter deliveries due to seasonal factors and lower-than-expected Onvo deliveries. Despite the immediate challenges, NIO’s 2025 delivery guidance suggests a doubling of year-over-year figures, which could be ambitious given the planned launch of the ET9, Series 5/6 refreshes, two new Onvo models, and the introduction of the Firefly starting in April, all amid intense competition in the EV market.
The analyst also mentioned that while gross margins may show some potential weakness in the March quarter, NIO aims to achieve a 15% vehicle margin by 2025 and targets a 25% margin in the longer term. In light of these factors, Mizuho has revised its estimates downward and set the new price target based on a valuation of 0.7 times the calendar year 2025 estimated price-to-sales ratio, which aligns with the average of 0.8 times for NIO’s Chinese peers. Despite current challenges, InvestingPro’s Fair Value analysis suggests NIO may be undervalued at current levels, with revenue growing at 15.67% year-over-year. For detailed insights and access to the comprehensive NIO Research Report, along with 1,400+ other stock analyses, consider an InvestingPro subscription.
In other recent news, NIO Inc. reported a fourth-quarter net loss of approximately 7.1 billion RMB, exceeding expectations and marking an increase from the previous quarter’s 5.1 billion RMB loss. Despite this, NIO’s revenue for the quarter grew by 6% to 19.7 billion RMB, aligning with the lower end of the company’s guidance. The vehicle gross margin remained steady at 13.1%, slightly below estimates, while the non-vehicle gross profit margin turned positive, improving the overall group gross profit margin to 11.7%. Additionally, NIO has provided guidance for the first quarter of 2025, projecting vehicle deliveries between 41,000 and 43,000 units and revenue between 12.4 and 12.9 billion RMB. In terms of market perception, Morgan Stanley maintained an Overweight rating on NIO, while JPMorgan downgraded the stock from Overweight to Neutral, lowering the price target to $4.70 from $7.00. NIO also recently surpassed Tesla (NASDAQ:TSLA) in Wards Intelligence’s Software-Defined Vehicle innovation ranking, securing the second position. Meanwhile, Chinese electric vehicle stocks, including NIO, experienced a surge amid a selloff in Tesla shares, supported by a positive sales outlook for March.
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