NIO Inc. (NYSE: NIO) stock jumped over 5% on Wednesday after Deutsche Bank issued an upbeat price forecast, citing a ‘better than feared’ 1Q24 outlook.
Deutsche Bank has reaffirmed its bullish stance on NIO Inc. (NIO), maintaining a Buy rating alongside a steady price target of $9.00. This decision comes hot on the heels of NIO’s fourth-quarter financial report, which unveiled a mixed performance but offered an upbeat outlook for the initial quarter of 2024.
NIO delivered 50,045 units in the fourth quarter, raking in revenue of 17.1 billion RMB, beating both Deutsche Bank’s and consensus estimates of 16.9 billion and 16.8 billion RMB, respectively. The company attributed this revenue beat to a higher average selling price (ASP). However, the company’s gross margin disappointed, coming in at 7.5%, below the expected 9.7% by Deutsche Bank and the consensus of 10.2%, primarily due to a lower vehicle margin of 11.9% compared to the forecasted 13.5%.
NIO reported operating expenses of 7.9 billion RMB for the quarter, outperforming forecasts of 7.2 billion RMB. The company attributed this upswing to substantial investments in research and development (R&D).
The adjusted earnings per share (EPS) came in slightly below estimates, with a loss of 2.81 compared to Deutsche Bank’s loss estimate of 2.69 and the consensus estimate of 2.70. However, investment income of nearly 980 million RMB from unrealized gains partially offset this shortfall.
NIO Q1 Guidance
NIO’s management has provided a delivery forecast for the first quarter of 2024, expecting to deliver between 31,000 and 33,000 vehicles, generating revenue between 10.5 and 11.1 billion RMB. This forecast is better than expected, especially considering the anticipated substantial rebound in March deliveries from the previous month’s figure of 8,132 units.
The implied ASP of the quarter might decrease, with vehicle margins initially under pressure but expected to recover to 15-18% in Q2. Increased volume, a shift to 2024 model-year vehicles, and cost optimization efforts will drive this recovery.
Moreover, NIO expects R&D expenses to average around 3 billion RMB per quarter throughout 2024, with full-year capital expenditures anticipated to be significantly lower than the previous year.
NIO Inc. (NYSE: NIO) Stock Reaction
NIO stock surged 5.29% to close at $5.77 on Wednesday. The traders had exchanged hands with 77,473,711 (77.47 million) shares compared to the average daily trading volume of 65.52 million.
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