- Nio (NYSE:NIO) is down over 50% in the year, making it one of the worst-hit electric vehicle (EV) stocks.
- Bank of America analyst Ming Hsun Lee believes a turnaround is around the corner, assigning a “buy” rating and a price target of $26.
- NIO stock has been declining since April due to several factors, but the company is gearing up for a big year.
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Chinese electric vehicle (EV) maker Nio (NYSE:NIO) intends to report its first-quarter results on June 9 before the U.S. markets open. In the runup to the earnings release, there are several positives that avid investors need to focus on. The latest is the new “buy” rating assigned to NIO stock by Bank of America with a price target of $26.
Bank of America’s New NIO Stock Rating
The multinational investment bank believes Nio will reach an even higher level in the future. It already has a greater sales volume, and margins should improve in the second half of 2022.
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Analyst Ming Hsun Lee believes one of the main drivers for NIO stock is its strong product cycle and order backlog. It’s also been able to pass on costs through price hikes and price adjustments. Although there was a supply chain disruption, this has normalized. Aside from this, there are signs that regulations on Nio’s listing in Singapore will be less strict.
Now that the analyst has seen the latest data on the model schedule and production recovery pace, estimated sales volumes for 2022 are up by 3% and 8% for 2023.
Nio is finally expected to turn a profit in 2024, with analysts pointing out that this is good news. Therefore, if you are looking for a quality EV play, NIO stock is attractive after a correction.
Nio Is Headed for a Big Year
Nio shares have been declining since April due to several factors. The company was recently forced to suspend operations in China due to Covid-19 restrictions. It also found itself on the Securities and Exchange Commission’s (SEC) list of foreign companies that failed to comply with U.S securities regulations. April’s deliveries slumped by 49% sequentially.
However, these fears are subsiding. China plans to give U.S. regulators access to audit reports of most Chinese companies listed in New York by the middle of this year to prevent any future disputes. It is a rare step for the world’s second-largest economy. The country is starting to become less restrictive and is easing the pressure on Chinese tech names.
In terms of sales, it should be a great year for the company. It is launching three models based on its second-generation NT2.0 platform, which will boost sales handsomely.
Plus, NIO has finally listed its Class A shares on the Singapore exchange. The company already has another listing in Hong Kong as well. These moves should pacify risk-averse investors who were unsure about the company’s future.
Robust Fundamentals Make NIO Stock a Buy
Despite challenges related to the pandemic, Nio still managed to sell more than twice as many EVs in 2021. However, NIO stock is trading at a steep discount after this year’s steep market correction. Considering the strong year ahead, now is the time to load up on this Chinese EV maker’s shares.
On the publication date, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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