Written by Cláudio Afonso | LinkedIn | X
Morgan Stanley analyst Tim Hsiao published a new research note on Thursday shortly after Nio‘s second quarter earnings results were reported reiterating an Overweight rating and $6.10 price target on the stock.
Following the results, Nio shares jumped 6 per cent to $4.50 in pre-market trading session. Based on the last closing price, Morgan Stanley’s price target indicates an upside potential of nearly 44 per cent.
“Nio reported a narrowing net loss of Rmb5.1bn in 2Q24 (vs. Rmb5.3bn in 1Q24), largely in-line with our expectation of a Rmb5.2bn loss, to which upside of better vehicle margin was offset by higher opex,” the analyst noted.
Hsiao highlighted that the average selling price (ASP) saw a slight decline of 2 per cent compared to the previous quarter while admitting that the vehicle gross margin exceeded the firm’s expectations.
“Total revenue increased 76% QoQ to Rmb17.4bn vs. the company’s original guidance of Rmb16.6-17.1bn for volume beat, albeit with a 2% QoQ ASP downtick. Vehicle gross margin increased 3ppt QoQ to 12.2%, exceeding our forecast of 11%, as improving scale and benefits of lower lithium and battery prices more than offset inferior mix,” he wrote.
The company reported a vehicle margin of 12.2 per cent in the second quarter, nearly doubling from the 6.2 per cent reported a year ago and up sequentially from the 9.2 per cent reported in the first three months of the year.
Morgan Stanely analyst added that the volume forecast for the third quarter — between 20,326 and 22,326 units — is in line with expectations.
“Opex came in slightly higher, with Rmb3.2bn R&D (+12% QoQ) and Rmb3.7bn SG&A (+25% QoQ) ahead of the official Onvo launch on September 20. 3Q24 volume guidance of 61-63k units (up 6-10% QoQ) is in-line with our forecast, implying 20.3-22.3k sales for September,” Hsiao wrote.
The analyst says L60, the first model under Nio’s sub-brand Onvo, is the next big catalyst as investors and analysts wait for more details on the demand for the SUV model.
“Revenue guidance of Rmb19.1- 19.7bn (up 10-13% QoQ) suggests low-single-digit ASP uptick in 3Q24. All eyes are on the L60 price/order conversion as well as 2H GpM trajectory,” the analyst concluded.
Written by Cláudio Afonso | LinkedIn | X
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The post Morgan Stanley Reiterates Nio’s Price Target After Second Quarter Earnings Results first appeared on EV.