Please ensure Javascript is enabled for purposes of website accessibility

Why NIO Stock Is Rising Again

By John Rosevear – Aug 26, 2020 at 11:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Wall Street is growing more bullish on the Chinese electric-car maker.

What happened

Shares of Chinese electric-vehicle maker NIO (NIO -2.44%) were rising on Wednesday, following bullish comments from analysts at Morgan Stanley and Citibank. 

As of 11:15 a.m. EDT, NIO's American depositary shares were up about 10.3% from Tuesday's closing price.

So what 

In a new note on Wednesday morning, Morgan Stanley analyst Tim Hsiao upgraded NIO to overweight, from equal weight, and raised the bank's price target for the stock to $20.50 from $12. For reference, NIO was trading at $19.65 as of 11:15 a.m. EDT.

Hsiao wrote that recent funding injections from economic-development authorities in China's industrial heartland have improved the company's access to credit, which in turn should make it much more competitive, financially speaking, with rival automakers. 

Hsaio also conceded that he had previously underestimated the potential benefits of NIO's closer engagement with government players, and of the company's new plan to offer batteries by subscription.  

A NIO automated battery-swap station.

NIO is now offering "batteries as a service." Buyers can choose to purchase a NIO without a battery, instead subscribing to the company's automated battery-swap service. Image source: NIO.

Hsaio's upgrade was probably the main factor driving NIO's shares higher on Wednesday morning, but it wasn't the only one.

Now what

In his own note on Wednesday, Citibank analyst Jeff Chung raised the bank's price target for NIO's shares to $18.10, from $16, while maintaining a neutral rating. 

Chung wrote that he has become more positive on NIO's medium-term outlook after a call with the company's management team. He thinks NIO's production ramp-up and its battery-subscription plan (which lowers the up-front cost of its vehicles) make it easier for auto investors to see how sales volumes will likely grow over the next few years. 

Chung now sees NIO selling about 81,000 vehicles in 2021, 134,000 in 2022, and 172,000 in 2023, all up from his earlier estimates. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nio Inc. Stock Quote
Nio Inc.
$17.19 (-2.44%) $0.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.