Mizuho cuts price target on Nio while raising delivery estimates

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Mizuho cuts price target on Nio while raising delivery estimates
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Mizuho reiterated a Buy rating on Nio Inc. (NYSE: NIO ) but cut their 12-month price target on the stock to $18.00 (from $20.00) after the Chinese electric automaker reported its 2Q earnings report.

NIO reported 2Q revenues of RMB 8.77 billion, missing the consensus estimate of RMB 9.51B. Deliveries for the quarter were down 24% compared to the first 3 months of the year. However, management guided 3Q deliveries of 56k units, up 138% q/q and 77% y/y as the electric automaker places its faith in its NT2.0 product rollout expected in September, along with an expanding service and power network.

Analysts wrote in a note, “While NIO did not guide its full 2023E production (prior ~250k), we believe the company can see improving deliveries through 2H23E as it expands its sales force and sees demand tailwinds from RMB 30k price cuts implemented in June.”

The automaker reported an EPS loss of (3.28) for the quarter, missing the consensus estimate of (2.41).

NIO is targeting ~30k vehicles/month starting in Oct'23 as it increases its sales staff.

Mizuho raised their F23E/F24E deliveries estimates to ~174k/290k units, up 42%/66% y/y. Mizuho also adjusted their 3Q revenue and EPS estimates from RMB 16.5B and (2.26) to RMB 19.2B and (2.16) respectively. Consensus estimates for the 3Q are RMB 17.4B/(2.42).

“Despite concerns of a softer consumer, we believe NIO remains well-positioned with multiple upcoming ramps including its lowest cost SUV ES6, a multi-year EV adoption tailwind, market leadership in premium EVs in China, the largest EV market, EU/Global expansion, and an expanding product portfolio,” added the analysts.

Shares of NIO are down 2.34% near end-of-day trading Wednesday.

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