NIO Stock Is Under the Microscope Ahead of Earnings; Here’s What to Expect

Most companies have already reported Q1 earnings, although some names have yet to deliver the quarter’s financials. Nio (NIO) is one of those but before the market kicks into action on Thursday (June 9), the Chinese EV maker will step up to the earnings plate.

As deliveries have already been announced for the quarter (NIO delivered 25,768 vehicles in Q1), Deutsche Bank analyst Edison Yu is not anticipating any big surprises, with the analyst expecting an “in-line” display. As such, attention will turn to the company’s outlook for Q2 and any commentary regarding the state of the supply chain following Shanghai’s reopening from the recent Covid lockdown.

For Q2, Yu is calling for a slight sequential drop to 24,000 deliveries, although that figure does suggest a “material sequential improvement” from May’s ~7,000 deliveries as Yu expects to see significant month-over-month volume improvement in June.

However, given the “lower volumes and imbalance within the order book (i.e., orders placed before price hike being fulfilled with components procured at newly elevated levels),” Yu also anticipates gross margins will drop sequentially. The good news, though, is that it should represent the “trough” for the year and with the reopening, NIO can “finally get back on track with its product super cycle this year.”

Having launched the ET7 at the end of March, Yu expects the ES7 SUV will be “officially unveiled” later in the month, while 2022 versions of the ES6, EC6, and ES8 – all boasting infotainment system upgrades – should also be revealed.

All told, Yu has lowered his 2022E deliveries estimate by 10,000 to 160,000, although the analyst keeps his 2023 forecast intact – at 320,000. The figure suggests deliveries will double year-over-year.

So, down to business, what does it all mean for investors? Yu maintained a Buy rating on NIO shares, but to “account for the broader de-rating in growth stocks,” the price target is lowered from $50 to $45. Nevertheless, the new figure still makes room for 12-month growth of a generous 135%. (To watch Yu’s track record, click here)

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It’s not often that the analysts all agree on a stock, so when it does happen, take note. NIO’s Strong Buy consensus rating is based on a unanimous 13 Buys. The stock’s $41.48 average price target is only slightly below Yu’s objective and set to generate returns of ~116% in the year ahead. (See Nio stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.