NIO (NYSE: NIO) stock fell during intraday trading Friday after Citi trimmed its price target. Despite this, the financial firm expects robust sales with the upcoming launches of ONVO and Firefly.
Citi has revised its outlook on NIO, adjusting the price target to $8.50 from the previous $10.40. However, the firm maintained a Buy rating on the company’s shares.
This revision comes as Citi incorporates NIO’s strong sales momentum this year and the expected launch of new models, ONVO and Firefly. The analyst at Citi forecasts an increase in sales volume, with estimates for 2024-25 raised from 190,000/259,000 units to 227,000/308,000 units, and expectations for 2026 set at 390,000 units.
However, Citi has tempered its gross profit margin (GPM) projections for 2024 and 2025, reducing them by 1.5 and 1.9 percentage points respectively, now at 10.0% and 11.5%, with a 2026 estimate of 13.2%. This adjustment reflects a more cautious outlook on the company’s profitability in the coming years.
Moreover, Citi has raised its forecasts for selling, general, and administrative (SG&A) expenses and research and development (R&D) costs to align with management guidance. Consequently, the analyst forecasts that NIO will incur net losses of Rmb16.2 billion in 2024, Rmb12.5 billion in 2025, and Rmb6.0 billion in 2026.
The new price target of $8.50 is based on a 1.7x price-to-sales (P/S) multiple applied to NIO’s projected 2024 revenue. This multiple is derived from a 1-year average, reflecting a valuation methodology consistent with historical performance. Despite the downward adjustment in the price target and profitability outlook, Citi’s Buy rating suggests a sustained optimistic view of NIO’s stock potential.
NIO (NYSE: NIO) Stock Movement
On Friday, NIO stock dropped 1.63%, closing at $4.83, marking a 10.39% decrease for the week. The trading volume was 34,658,600 shares, lower than the average daily volume of 55.10 million.
