Nio (NIO 8.72%) stock plunged to a 52-week low of $4.78 during trading on Tuesday after announcing its fourth-quarter and 2023 numbers early in the morning. The electric vehicle (EV) maker has struggled to grow sales and margins amid a slow global EV market and intensifying competition in its home market of China.
Yet, Nio's outlook for 2024 wasn't nearly as bad as many expected it to be. That's one reason Deutsche Bank analyst Edison Yu, who follows Nio closely, maintained a buy rating and previous price target of $9 a share on the EV stock after earnings. That represents almost a 69% upside from Nio's previous day's closing price and makes the stock look like a solid bargain right now.
Is the analyst right about Nio stock?
Nio's fourth-quarter deliveries rose 25% year over year to a little over 50,000 units, but were down about 10% sequentially. Other notable numbers include:
- Vehicle sales: Up 4.6% year over year to $2.1 billion.
- Vehicle margin: 11.9% versus 6.8% in the year-ago quarter and 11% in Q3 2023.
- Gross margin: 7.5% versus 3.9% in the year-ago quarter and 8% in Q3 2023.
- Net loss: Down 7.5% year over year to $756 million but up 17.8% sequentially.
For 2023, Nio reported a gross margin of only 5.5% versus 10.4% in 2022, implying pricing and volume pressure.
There's a silver lining though.
Since January and February are seasonally weak months in China, Nio expects its Q1 deliveries to be flat to up 6% year over year to around 31,000 to 33,000 units. Nio, however, expects sales to rise from March as it begins deliveries of its recently upgraded 2024 models and projects vehicle margins of 15% to 18% for 2024. Nio will also unveil a mass-market brand called Alps in Q2.
With Nio stock now trading at only 1.2 times sales (P/S), I believe it's a great value to buy now for the long term.
