UBS Upgrades Nio to ‘Buy’, Raises PT to $8.50
UBS analyst Paul Gong upgraded on September 16, 2025, Nio from ‘Neutral’ to ‘Buy’ with a price target of $8.50 (from $6.20).
“Upgrade to Buy: Consumer confidence restored
Upgrade from Neutral to Buy We upgrade Nio from Neutral to Buy, as the company’s latest products could further attract consumers after the US$1bn equity offerings strengthened visibility on its healthy operations.
We expect Nio to hold net cash of Rmb21bn by end-2025 and achieve FCF breakeven in 2026.
With upward consensus revisions to its revenue and bottom-line estimates, Nio’s valuation discount with its closest peer XPeng should also narrow, in our view.
We raise our price target from US$6.20 to US$8.50, based on 1.0x 2026E P/S.
Restored consumer confidence
For years, a key drag on Nio’s sales has been consumers’ concern about its steep operating loss, as it has cumulatively lost >Rmb100bn over the past decade.
After the recent US$1bn placement strengthening its balance sheet and the company’s operating improvement towards non-GAAP OP breakeven in Q4, we think this concern has receded and consumer confidence in the company has been restored, based on our conversations with its buyers.
In addition, the recently launched L90 and ES8 are competitive products in their category.
We foresee some sustained sales momentum over the next few months.
Investor concerns ease
The contribution of ES8 to sales should not only drive volumes but also lift ASP and GPM with its >Rmb400k price.
Due to this, Nio’s Q4 revenue trend could be ~50% higher than that of its closest peer XPeng, mostly from its high product mix.
Yet Nio’s market cap, even counting the recent placement dilution, remains ~25% smaller than XPeng’s.
Historically, its deep operating loss was the explanation, so as it approaches OP breakeven with higher vehicle GPM than XPeng, plus a strengthening balance sheet, this P/S discount should narrow, in our view.
Valuation
We raise our revenue forecasts 6–36% for 2025–26 due to encouraging feedback on new products and restored consumer confidence.
Nio is trading at 1.2x/0.7x 2025E/2026E P/S, compared with XPeng’s 1.9x/1.6x, which we expect Nio to achieve a 2024–2027E CAGR of 36%, no weaker than XPeng.
We set our US$8.50 price target on 1.0x 2026E P/S, benchmarked against the average P/S multiple of peer EV makers BYD, XPeng, Li Auto and Leapmotor.
We upgrade the stock from Neutral to Buy.”
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