Deutsche Bank, a prominent financial institution, has not only upheld its Buy rating on Nio Inc (NYSE:NIO) but also revised the stock's 12-month price target to $17.00, indicating an optimistic outlook compared to the previous target of $13.00. This strategic adjustment arrives on the cusp of the electric automaker's impending 2Q earnings announcement.
Operational Excellence Shines Through
NIO’s operational performance has undergone a remarkable transformation in the last quarter. With a swift ramp-up of new vehicle models and enhanced sales efficiency, the company’s trajectory is increasingly promising, as observed by Deutsche Bank’s analysts.
Nio reported the delivery of 23,520 units in the second quarter, slightly below its anticipated range of 23,000 to 25,000 units. The analysts forecast Nio’s second-quarter revenue to align with consensus, hovering around RMB 9.1 billion. Furthermore, they anticipate a potentially modest sequential enhancement in vehicle margin.
Anticipating a Strong Quarter Ahead
With a record-breaking July that witnessed the delivery of over 20,000 vehicles – a milestone for NIO – Deutsche Bank predicts that the company’s 3Q23 guidance will exceed 60,000 vehicles. This surge will be driven primarily by the robust demand for the ES6 model. They hold the belief that Nio’s vehicle margin will break into double digits during the third quarter and surpass 15% in the fourth quarter, even after considering price adjustments. While the margin ranged from 5% to 6% in the first half of the year, Deutsche Bank maintains a positive stance on these forthcoming improvements based on insights provided by management.
Deutsche Bank’s optimism is reflected in its updated forecast for 2023 deliveries, now projected at 180,000 units – a substantial 47% year-over-year increase. Adjusted gross margin estimates stand at 7.4%. Looking forward to 2024, the bank has also fine-tuned its estimates for both volume and margin, reflecting a buoyant outlook for NIO’s continued growth.
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