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Shares in Nio (NIO) surged 6.5% in Tuesday’s trading, hitting a new all-time high of $35.87 and closing at $35.50.
Sparking the surge higher were unconfirmed media reports that China’s electric vehicle company is now looking to expand into Europe.
According to these reports, the company intends to launch its ES8 and ES6 models in Europe next year with its first NIO House store set for Copenhagen, Denmark. That marks a change from previous reports which had highlighted Norway as the company’s first targeted destination outside China.
In a project dubbed ‘Marco Polo’ Nio is said to be aiming for sales of 7,000 electric vehicles in its first two years- and apparently already has an overseas unit set up with sales ready to start in the second half of 2021.
Earlier this week Nio revealed that it delivered 5,055 vehicles in October 2020, a new monthly record representing impressive 100.1% year-over-year growth.
As of October 31, 2020, cumulative deliveries of the ES8, ES6 and EC6 reached 63,343 vehicles. (See NIO stock analysis on TipRanks).
JP Morgan’s Nick Lai has just upgraded Nio from hold to buy with a Street-high $40 price target (13% upside potential). “In China’s smart EV market, we expect Nio to be a long term winner in the premium space among Chinese brands” the analyst explained.
Although Lai admits that he missed the stock’s massive rally in May, he nonetheless sees the potential for meaningful upside on a valuation of 3x 2025E EV/sales. Shares in NIO are now up over 780% YTD.
“We conclude that Nio is expected to dominate ~30% of the premium passenger EV market or reach 334k units by 2025” Lai told investors, adding that the next big event is the 3Q20 result in mid-November.
He expects a solid backlog orders of the newly launched EC6 crossover or around eight weeks wait time with GPM topping ~12% from 8% in 2Q20.
Overall, NIO boasts a cautiously optimistic Moderate Buy Street consensus with 6 buy ratings, 3 hold ratings and 1 sell rating. Meanwhile the average analyst price target suggests significant downside potential of 31% from current levels.