Barclays Keeps ‘Underweight’ Rating on Nio

Barclays analyst Jiong Shao reiterated on November 21, 2024, an ‘Underweight’ rating on Nio, with a $4.00 price target.

“Summary: NIO’s 3Q results were broadly inline for revenues, margins and losses.

The company launched its first car under the new brand ONVO (lower end compared to NIO) around the end of September and is about to unveil yet another even lower-end brand, Firefly, next month.

Management commented about multiple new cars expected to be launched under these two new brands on top of its new NIO ET9 and refreshed versions of NIO branded models in 2025.

The EV industry in China is very competitive and having to manage launches of two new brands while managing the existing one is an enormous challenge, in our view, especially for a company that does not have unlimited financial and human resources.

While management has provided a bullish outlook for units and gross margins for 2025, we believe all the expectations or assumptions are based on the success of the two new brands, which are anything but guaranteed.

What we liked: ONVO capacity expansion is on track to reach 10k monthly units by December and 20k by next March; gross margins gradually improving for NIO branded EVs.

What to monitor: Traction of all the new cars to be launched in the coming months.”

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