NIO: Despite chip shortage, shipments could double this year, analyst says
Chinese electric car company NIO (NIO) is due to release its first quarter results on April 29, and Mizuho analyst Vijay Rakesh is bullish – noting the stock as a “buy” with a price target of $ 60. (To check out Rakesh’s track record, click here) As the analyst advises in his recent note, NIO increased its March year-over-year deliveries fivefold, to around 20,100 vehicles, while the production of its ES8 and EC6 SUVs were increasing. – far faster than the global auto industry’s output growth of 16%, or the 77% increase in unit sales in China, one or the other. And NIO’s sales topped its own published forecast of 19,500 deliveries. Despite well-publicized, industry-wide supply issues of semiconductors needed for automotive production, Rakesh believes the company’s sales are expected to “remain strong through 2021E”, roughly doubling until 2021E. ‘end of year although production slows somewhat in the short term in Q2, the industry is resolving its semiconductor supply chain issues. Rakesh expects deliveries of 87,000 electric vehicles this year, 141,000 electric vehicles in 2022 and 223,000 electric vehicles in 2023. Helping NIO maintain this strong growth trend, according to the analyst, is the leading position of the company in the “battery exchange stations in China”, where the batteries of electric vehicles are depleted can be charged – or alternatively, turned off for fully charged batteries in a matter of minutes. (Because NIO sells the cars separately from the batteries, and provides the batteries “as a service”, battery exchanges are included in the price of the latter). Rakesh estimates that it costs NIO between $ 450,000 and $ 1.5 million to set up a battery swap station, and an additional $ 300,000 to store it with batteries in inventory, although both costs will decrease in the future as “standardization” is implemented across the sector in accordance with government policy. Over the next four years, Rakesh notes that NIO will grow from the roughly 500 stations it plans to have by the end of this year, ultimately setting up as many as 5,000 battery swap stations from this. type in partnership with the Chinese state-owned oil tanker. and the gas giant Sinopec. The analyst further notes that NIO will allow Ford Mustang-E electric car owners to use its battery charging stations, thereby increasing NIO’s customer base and “helping NIO to amortize battery station costs faster.” What does all this mean for NIO in terms of dollars and cents? Rakesh estimates that NIO will generate $ 5.2 billion in revenue and lose $ 0.29 per share this year, but increase revenue by 85% to $ 9.6 billion in 2022 and make its first profit that year ( $ 0.14 per share). Although the company turned profitable in 2022, the analyst chooses to base his price target of $ 60 not on profits, but on a valuation of 8.8 times estimated sales in 2022. (Perhaps because That to say that NIO is worth “428 times the estimated profits in 2022” would be a little too rich.) Anyway, by 2023, the analyst sees its revenues increase by 73%, reaching 16.6 billion dollars, and profits multiply by six to reach $ 0.88 per share. Assuming NIO hits those numbers, its P / E based on 2023 earnings would drop to a slightly more acceptable 68x earnings. Nio has strong support from the rest of the street. With less than 3 takes, the other 6 analysts who published a review in the past 3 months recommend the stock as a buy. The moderate buy consensus rating is accompanied by a price target of $ 62.30, which implies a 72% increase from current levels. (See NIO Stock Analysis on TipRanks) To find great ideas for EV stocks traded at attractive valuations, visit TipRanks Best Stocks to Buy, a newly launched tool that brings together all the information about TipRanks stocks. Disclaimer: The opinions expressed in this article are solely those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.