- Morgan Stanley analyst Tim Hsiao reiterated his “overweight” rating and $34 price target for NIO stock
- The analyst believes a new Hong Kong index inclusion will provide Nio (NYSE:NIO) with more liquidity and diversity
- Shares of NIO stock are down roughly 50% year-to-date (YTD)
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Despite a positive Morgan Stanley note and the S&P 500 and Nasdaq 100 in the green, shares of Nio (NYSE:NIO) closed down 2.7% today. This is possibly attributable to competitor XPeng (NYSE:XPEV), which announced first-quarter earnings. While revenue and earnings per share (EPS) came in above analyst estimates, the electric vehicle (EV) company’s guidance is what’s really on investors’ minds.
XPeng guided for Q2 revenue between $1.02 billion and $1.13 billion. However, analysts were expecting revenue of $1.25 billion. In recent months, Covid-19 lockdowns in China, component shortages and supply-chain challenges have all hampered Chinese EV companies. NIO stock is no exception.
Still, Morgan Stanley believes the company’s recent inclusion on the Hang Seng TECH Index is a step in the right direction. Let’s get into the details.
NIO Stock: Morgan Stanley Bullish on Index Inclusion
Today, Morgan Stanley analyst Tim Hsiao reiterated his “overweight” rating and $34 price target for NIO stock. Hsiao said the new index inclusion will provide Nio with a “bit more liquidity [and] a bit more diversity.”
In addition, the analyst added that the company’s recent listing on the Singapore Exchange should attract some “high net worth investors.” Hsiao also believes the company is now better positioned to hedge against U.S. delisting risks. Nio is currently one of several Chinese companies included on the Holding Foreign Companies Accountable Act (HFCAA) list.
Wall Street Analysts Chime in on Nio
- UBS has a price target of $32 for NIO stock. Analyst Paul Gong believes NIO’s decline has gotten out of control. The analyst said Nio’s three new product launches this year “could drive sales acceleration.” The firm’s proprietary survey data also shows that the company has “improving brand recognition.” This could help increase sales.
- Bank of America has a price target of $26. Analyst Ming Hsun Lee recently pointed out that Nio currently trades at a 1.7 forward multiple of enterprise value to sales. This multiple is one standard deviation below its historical average. The company last traded at this multiple in late 2019 to early 2020. Meanwhile, its current fundamentals — such as sales growth, brand equity and cash flow — have all improved greatly since then.
- According to Yahoo! Finance, Nio has an average price target of $39.88 among 28 firms with coverage of the company.
On the date of publication, Eddie Pan did not hold (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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