Stock in NIO could more than double, according to Deutsche Bank analyst Edison Yu, who published a “comeback roadmap” for the Chinese electric- vehicle maker on Tuesday. The upbeat note, however, couldn’t stop NIO from having a very bad day on Tuesday.
NIO stock dropped about 35% this past year, but Yu cited a number of factors that could trigger a rally. Yu rates NIO (ticker: NIO) shares Buy and has a target of $70 for the price. That implies a gain of about 120% from the current price of about $32.
NIO increased its deliveries by more than 100% in 2021, but like shares of many U.S.-listed Chinese companies, the stock fell.
Yu is focused on fundamentals rather than the potential for regulatory trouble. He listed eight catalysts he sees for the stock.
The first is that NIO will start delivering its new ET7 sedan in March. Yu expects the company to unveil its sixth model around midyear, for No. 2. Upgrades to NIO’s driver-assistance features represent a third potential boost. And another new model, the ET5, is due to be shipped later in the year, while the ET7 should arrive on German roads around the same time.
The sixth model could be shipping by year-end. That’s the sixth catalyst. Seventh on the list is battery improvements Yu expects late in the year. Finally, Yu expects the company to announce a lower-price, mass-market vehicle by year-end.
If things work out as Yu foresees, the stock could regain some lost mojo. NIO shares rose roughly 1,100% in 2020, before the 2021 decline.
The rest of Wall Street doesn’t seem to have much of a problem with his view. Almost 85% of analysts covering the company rate the shares at Buy, far more than the average Buy-rating ratio for stocks in the S&P 500,at about 55%. The average price target among analysts is $60 a share, a little lower than Yu’s call, but a figure that still implies gains of almost 90% from recent levels.
NIO stock didn’t react to the report on Tuesday. Shares finished down 5.7, while S&P 500 dipped 0.1%, and the Dow Jones Industrial Average gained 0.6%. The stock was up 5.7% Monday.
