Nomura analyst Martin Heung initiated coverage of Chinese EV maker Nio with a Buy rating and $80.30 price target, meaning a 37.6 percent upside potential.
Nio shares, which were down 2.8% in Friday's pre-market trading session, rebounded quickly after Nomura's report came out and are now up 0.53% to $58.65.
In a research note to investors Heung said he likes Nio for its "Tesla-like top-down approach" in launching its electric vehicle pipeline, starting with its luxury flagship model ES8, followed by "more consumer friendly models and variants."
Nio has successfully established itself as a premium auto brand "given car buyers are willing to pay a price similar to those for entry-level models of major European luxury original-equipment-manufacturers," the report said.
Heung believes Nio's battery-leasing program "paves the way for the revolutionary concept of battery swapping."
His price target of $80.3 is based on a 25% discount of Tesla's current price-to-sales ratio of 26 times.
Earlier today, Nio announced that it is adjusting the free lifetime battery swap benefits for its customers, retracting part of its October decision.
On Thursday Nio launched a short-term 0 down payment purchase option for the new Nio ES8, ES6, and EC6 from January 20 to February 28.
This is expected to drive Nio sales higher, although it will also result in later delivery dates for several models that are already delayed. In China, the minimum down payment for a car is typically 15% of the vehicle price.
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