Analysts at Deutsche Bank on Tuesday raised their price target on Nio by 30 percent to $34 and reiterated their Buy rating following another record monthly sales for the Chinese EV maker.
The analysts led by Edison Yu believe that Nio's order book will "remain robust."
Nio said on Monday it delivered 5,055 vehicles in October, up 100.1% year-on-year, and marking the eighth consecutive month of year-on-year growth.
The deliveries consisted of 2,695 ES6s, its 5-seater premium smart electric SUV, 1,477 ES8s, the company's 6-seater and 7-seater flagship premium smart electric SUV, and 883 EC6s, the company's 5-seater premium electric coupe SUV.
Deutsche Bank said there's some risk that Tesla could cut the price of its locally made Model Y, "which could potentially hurt near-term sentiment and slow Nio's order book momentum considering it would be a direct competitor to Nio's EC6 and ES6 vehicles.
"Beyond that, as BEV adoption increases and word of mouth spreads ... we continue to believe Nio can take material share in the premium segment as consumers begin to understand the value proposition and quality of its products and services," the report said.
As of press time Nio shares surged more than 7 percent to trade at $35.71 with a market cap of $48.75 billion. The shares have gained about 800% this year.
The high valuation has raised some doubts among many investors. But in the view of Chinese investment bank CICC, although the valuation has gone into no man's land, the short-term trend is still strong driven by positive data.
CICC said in a report released on Tuesday that the valuation of the A-share new energy vehicle sector has hit a new high, with BYD and Nio having become China's first and second largest car companies by market capitalization. Valuations have stretched as the new Chinese car makers have significantly surpassed or approached Tesla's price/sales ratio in 2021.
"The strong near-term trend for these leading EV makers is sustainable despite their move away from our valuation system and into marginal pricing," the report said.
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