Nio will be a ‘winner’ in EV market, analyst says

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Nio Inc. got a bullish endorsement Monday from J.P. Morgan analyst Rebecca Wen, as she raised her stock price target on the belief the Shanghai-based company will be a “winner” in the electric vehicle market.

Wen also raised her price target on XPeng Inc.’s stock XPEV, -3.82%, as she expects the Guangdong, China-based company will win the mid- to lower-end EV market.

Nio’s NIO, -5.72% price target was raised to $46 from $41 and XPeng’s target was boosted to $43 from $27. Wen kept her overweight ratings on both stocks.

“We believe Nio will be a long-term winner in the premium EV space, with ~ 30% market share by 2025,” Wen wrote in a note to clients. “A higher valuation can be justified as Nio is leading the transformation of its business model in China’s smart EV market — from direct sales currently to potential monetization of both ‘B’ and ‘C’ customers through its platform and content offering in the future — similar to the phenomenon we witness in e-commerce business now.”

The stock shot up 6.8% into record territory in midday trading. The stock has skyrocketed 1,005.5% year to date through Friday. In comparison, U.S.-based rival Tesla Inc.’s stock TSLA, -2.58% has run up 422.5% this year and the S&P 500 index SPX, -0.14% has gained 11.7%.

Meanwhile, XPeng shares shed 1.8% in midday trading. The stock, which went public on Aug. 27, has still soared 76.3% just this month.

Separately, Wen upgraded Dongfeng Motor Group Co. Ltd. DNFGY, +8.31% 489, +8.37% to overweight from neutral, saying an upcoming A-share issuance, which will give the Hubei, China-based company funds to invest in new EV brand “Lantu,” will be a near-term catalyst.

Meanwhile, Wen downgraded both Guangdong-based BYD Co. BYDDY, -10.36% 1211, -5.86% and Hong Kong-based Geely Automobile Holdings Ltd. GELYY, -5.76% 175, -3.08% to neutral from overweight, citing valuation concerns.

For BYD, Wen said she likes the long-term story transforming toward a top battery maker, but “the stock now loss fairly valued to us, hence our advice to book profit and look for a better entry point,” when neighborhood EV industry growth decelerates.

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