The electric vehicle (EV) sector is currently out of favor with investors just now. Slowing sales growth, concerns about battery performance in inclement weather, and weak quarterly results from major players in the industry lately have dampened enthusiasm.

For EV stock bulls, this provides opportunities to snap up some of these affected stocks at a discount. For instance, one analyst is convinced that Chinese company Nio (NIO 8.72%) is quite the irresistible bargain at the moment, so much so that he believes it will more than double in price over the next 12 to 18 months.

A bullish believer in the stock

Nio just released a fresh earnings report. In reaction, Morgan Stanley's Tim Hsaio reiterated his overweight (i.e., buy) recommendation and $13 price target on the EV maker's shares.

That might not have been the most intuitive stance to take, as Nio missed analyst estimates on both the top and bottom lines in its fourth quarter. Worse, deliveries are expected to fall significantly this current (first) quarter when compared to the previous frame, plus its revenue guidance didn't meet the consensus analyst estimate. Zooming out to the full year, the company's net loss widened considerably from the 2022 result.

As a Nio bull, Hsaio put a positive spin on the company's performance. He wrote in a new analyst note that this was affected by "larger one-off impacts related to inventory provision, accelerated depreciation on production facilities, and losses on purchase commitments for old ES8, ES6 and EC6 [models]."

Facing a tougher road ahead

Of course, it's hardly unusual for a hot industry to cool down sooner rather than later. Now that EVs are no longer novelty items and have become commonplace on roads in this country and in China, the impressive sales growth is slowing. The EV market is crowded now, and its players have to adapt to an environment in which EVs are a harder sell.

Given that, I'm not convinced that Nio can be a top global player and investors should continue to be careful with the stock, despite Hsaio's enthusiasm for Nio.