Shares in Chinese electric car maker NIO extended their winning streak on Monday to two straight days, boosted by higher-than-expected earnings and a more optimistic outlook on Wall Street.
NIO (ticker: NIO) shares rose 3.1% to $ 41.13 in early trading on Monday. The S&P 500 and Dow Jones Industrial Average rose 0.4% and 0.8%, respectively.
Late Thursday night, the NIO released its first quarter results, providing solid numbers. CEO William Bean Lee noted that the company has set a quarterly record for 20,060 vehicle shipments, but will face “major challenges” in the second quarter due to a global shortage of semiconductors for automobiles.
Mizuho analyst Vijay Rakesh is not focusing on chip shortages. He draws attention to NIO’s higher-than-forecast profitability and plans for future capacity. The company announced last week that it is participating in NeoPark, an industrial complex partly built by the government that will eventually have the capacity to produce 1 million electric vehicles a year. In Sunday’s research report, Rakesh raised his target price to $ 65 per share from $ 60. He recommends buying NIO shares.
JP Morgan analyst Nick Lai, in a research report on Friday, called the NIO results “sheer luck amid headwinds.” He noted that sales were growing faster than single shipments due to more expensive features such as a larger battery and improved driver assistance features. Lai also recommends buying the stock. Its target price is $ 70 per share.
Morgan Stanley Analyst Tim Xiao Buys Stock; its target price is $ 64 per share. He was encouraged by management comments that orders in April rose significantly, but expressed some concerns about semiconductor-related production bottlenecks. “The previous production stop may [term] supplies, manufacturing [the second quarter] more server-side loaded, ”Xiao wrote in Friday’s report.
For investors, this means that they should prepare for a consistent decline in supplies in May. In April, NIO delivered over 7,100 vehicles.
Most of the analysts who look at NIO stock – 67% – buy the stock. The average purchasing power ratio of stocks in the S&P 500 is approximately 55%. However, the average estimated price of an analyst implies a huge profit. Analysts believe NIO shares are worth around $ 58 per share, up 42% from recent times.
In part, the high target prices are a legacy of recent trading activities. NIO shares have had a tough 2021: they have plunged about 16% since the beginning of the year. The stock is down about 39% from a 52-week high of nearly $ 67 a share in January. Rising interest rates, renewed competition and a global shortage of automotive semiconductors have weighed on investor sentiment.