Many stocks that found 2021 hard going will be eyeing a comeback in 2022 and you can add Nio (NIO) to that list. In what was generally a catalyst-free year, and driven by a slew of negative macro developments, shares of the Chinese EV maker sunk by 38%.
However, Deutsche Bank’s Edison Yu anticipates a very different 2022 will unfold.
“We expect NIO’s marquee product developmental efforts to become reality in 2022, which in our view should help the stock recover,” the analyst said. “We believe the order book for these new models is very robust, and NIO’s LiDAR supplier Innouvsion recently confirmed this by commenting its initial capacity will already be 100k units. Moreover, NIO looks likely to complete a Hong Kong primary listing by the summer and gain SH-HK Connect inclusion by year-end, alleviating concerns about a US delisting.”
There are also several important catalysts on the horizon.
Customer deliveries for the ET7 flagship sedan should kick into action at the end of March. Yu thinks the order book has already reached the 50-60,000 mark and believes the vehicle should “sell very well.” Limited by supply chain issues, Yu anticipates 30,000 deliveries in 2022, but double that next year.
There should also be an unveiling for the 6th model in the company’s line up – an SUV which will be based on the next-gen NT2.0 platform with LiDAR and will come in “slightly larger” form than the existing ES6. Yu anticipates the reveal will take place toward the end of Q2 or early Q3, with deliveries starting in Q4, not long after the ET5 zooms out the gates.
This model is slated for a September launch, and with a lower price point (328,000 RMB pre-subsidy compared to the ET7’s 440,000), Yu expects the model will “materially broaden” the reach of NIO’s offerings and could “augment the TAM” by 800,000 units.
Other catalysts include Nio’s planned entry to four additional European markets: Germany, Netherlands (where the company’s regional HQ is based), Denmark, and Sweden. Having opened stores in Norway last September, initial customer reception appears to have been positive.
Additionally, a 4Q22 release for the hybrid solid state battery appears in the cards while Yu also expects that before the year’s end there will be more color regarding the company’s plan for a “mass market brand.”
All of the above underpins Yu’s Buy rating, while his $70 price target suggests shares will be changing hands for ~122% premium a year from now. (To watch Yu’s track record, click here)
Overall, other than one skeptic, all 7 other recent Nio reviews are positive, providing the stock with a Strong Buy consensus rating. Yu’s confident price target is no anomaly; the Street’s average target clocks in at $61.86, and is set to generate returns of ~96% in the year ahead. (See Nio stock analysis on TipRanks)
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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.