NIO (NYSE: NIO) The stock’s long, painful correction continues into 2023. The stock has generally been in decline since early 2021 when the outlook for the electric vehicle sector was rosier. But recent times have been more difficult for the industry as many participating companies have suffered against the backdrop of increased competition, falling demand and a difficult economic environment.
Meanwhile, the Chinese electric car manufacturer was unable to achieve its goals. For 2023, the company was hoping to deliver 250,000 cars initially but had to settle for a less impressive 160,000 cars.
However, as the new year begins, Mizuho analyst Jason Getz believes the company still has a lot to do.
“We see NIO as being well-positioned as a premium electric vehicle leader in China, the world’s largest electric vehicle market,” Getz said. “We believe NIO is differentiating itself through its Battery Swap-as-a-Service (BaaS) program, which has now expanded with multiple partners including Geely and Changan, and we believe a third will be announced soon to help develop and standardize battery swapping technology.”
While Getz also points to failed vehicle deliveries in 2023, the setup looks more favorable this year, with the analyst expecting Nio to increase to around 230,000 units, which would represent a year-over-year increase of roughly 44%.
The positive outlook is supported by the transition of all models to NIO’s NT2.0 platform, a “renewed focus” on its core portfolio, expansion of the sales team, and a strategic move to bring vehicle manufacturing in-house via manufacturing buyouts. Equipment and assets from JAC. This acquisition will reduce manufacturing costs by 10%.
Cash burn concerns are also expected to ease in the near term, thanks to a recent cash injection of around $2.2 billion from a strategic equity raise with Abu Dhabi-based CYVN Holdings.
NIO also continues to differentiate itself with its innovative battery swapping technology, which addresses challenges associated with charging accessibility and vehicle charging times. This issue is considered one of the biggest obstacles to wider adoption of electric vehicles.
Additionally, the company is actively reducing or delaying spending on non-core projects, consistent with its goal of achieving a long-term vehicle gross margin exceeding 20%.
Finally, Getz rates NIO shares a Buy, while his $15 price target suggests shares will rise 95% over the next year. (To watch Getz’s track record, click here)
Over the past three months, in total, 10 analysts have weighed in on NIO’s reviews, which break down into 7 Buys and 3 Holds, all culminating in a Moderate Buy consensus rating. The forecast calls for one-year returns of approximately 44%, considering the average target of $11.06. (be seen New stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.