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Nio (NYSE:NIO) The long and painful correction in stock prices continued into 2023. Stocks have generally underperformed since early 2021, when the outlook for the EV sector became much more rosy. However, the industry has recently become even more difficult, with many of the companies involved struggling due to intensifying competition, declining demand, and a harsh economic environment.
Meanwhile, Chinese EV manufacturers are failing to meet their targets. The company originally wanted to deliver 250,000 vehicles in 2023, but had to settle for a much lower number of 160,000.
But as we enter the new year, Mizuho analyst Jason Goetz believes the company still has a lot of potential.
“We believe NIO is well-positioned as a top premium EV player in China, the world’s largest EV market,” Goetz said. “We believe NIO is differentiating with its unique battery-as-a-service (BaaS) swapping program, which is currently expanding with multiple partners including Geely and Changan. We believe a third installment will be announced soon to support the development and standardization of “exchange technology.” ”
Goetz also pointed to delivery failures in 2023, but this year appears to be in better shape, with analysts expecting Nio to grow to around 230,000 units, which is a year-on-year increase. This corresponds to an increase of approximately 44%.
This positive outlook is underpinned by NIO’s strategic move to move all models to the NT2.0 platform, “renew focus” on its core portfolio, expand its sales team, and bring vehicle manufacturing in-house through acquisitions of manufacturing companies. It is being JAC Equipment and Assets. This acquisition has the potential to reduce manufacturing costs by 10%.
Concerns about short-term cash burn are also expected to ease, thanks to a recent cash injection of about $2.2 billion from a strategic equity raise with Abu Dhabi-based CYVN Holdings.
NIO also continues to differentiate with innovative battery replacement technology that addresses challenges related to charging accessibility and vehicle charging times. This issue is considered one of the biggest obstacles to widespread adoption of EVs.
Additionally, the company is actively constraining or deferring spending on non-essential projects in line with its goal of achieving long-term vehicle gross margins in excess of 20%.
Overall, Goetz rates NIO stock a Buy, and his $15 price target suggests the stock will appreciate 95% over the next 12 months. (Click here to see Getz’s track record)
A total of 10 analysts have reviewed NIO over the past three months. There were 7 buys and 3 holds, all with a Moderate consensus rating. Considering the average target is his $11.06, projections have him returning ~44% for the year. (look Nio stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
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