In March, CICC, China's largest investment bank, lowered its price target on NIO by 27% to $62 from $85, citing a pullback in the stock price of Tesla as an EV maker "valuation anchor". Now, it has raised its price target after NIO recorded a strong delivery performance.
In a research note issued Tuesday, CICC raised its price target on NIO by 11 percent to $69, implying a 37 percent upside from the EV maker's previous trading close of $50.40 last Friday. NIO closed down 0.22 percent to $50.29 on Tuesday after the US stock market was closed for the holiday on Monday.
CICC said it raised its sales estimate for NIO by 5 percent to 98,000 units in 2021 based on a strong demand outlook and the easing of the chip crisis. The team now expects NIO to deliver 170,000 units in 2022.
NIO released data on July 1 showing that it delivered a record 8,083 vehicles in June, up 116.1 percent year-over-year.
This is the first time the company has delivered more than 8,000 in a single month, an increase of 20.4 percent compared to May.
NIO delivered 21,896 vehicles in the second quarter, up 111.9 percent year-over-year, marking five consecutive quarters of positive growth. NIO delivered 41,956 units in the first half of the year, reaching 95.9 percent of last year's full-year deliveries.
CICC believes that NIO is on track to deliver 26,000 and 30,000 units in the third and fourth quarters, respectively, based on the easing of the chip shortage that has constrained capacity expansion and research indicating strong current market demand.
CICC believes that NIO is accelerating the construction of medium and long-term competitive advantages and entering a definitive upward path.
NIO has developed systematic advantages in several aspects including product intelligence, brand premiumization and user operation, the team said.
NIO's established advantages are likely to expand in a non-linear and accelerated manner driven by user growth and autonomous driving, according to CICC.
The team explained further:
On the product side, the ET7 has set a new benchmark for autonomous driving hardware platforms, and NIO is expected to continue to lead in the high-end smart electric vehicle market with its hardware configuration and full-stack R&D capabilities.
In terms of service, it is building charging stations and battery swap replenishment networks on a large scale to address the most basic needs of users.
Based on the new sales forecast, CICC adjusted NIO's non-GAAP net profit forecast in 2021 from RMB -2.6 billion to RMB -2.74 billion, and adjusted the non-GAAP net profit forecast in 2022 from RMB 70 million to RMB 3.06 billion.