Compared to TSLA, NIO stock is attractively valued, the analyst says

Compared to TSLA, NIO stock is attractively valued, the analyst says

Compared to TSLA, NIO stock is attractively valued, the analyst says

There isn’t much controversy on the subject anymore, as most agree that the future of the automotive industry lies in electric vehicles (EVs).

Between 2022 and 2030, Mizuho analyst Vijay Rakesh predicts that BEV (battery electric vehicles) sales will grow at a CAGR (compound annual growth rate) of 22% globally and could be “resilient to macroeconomic risks from higher interest rates as remains the overall commercialization corridor secular.”

China is currently the segment leader, accounting for around 64% of all BEV sales with Europe back at 19% while the US claims a 10% decline.

And it is for one of the big Chinese players that Rakesh has high hopes this year. “We watch Nio (NYSE:NIO) is well positioned as a leading premium EV player in China, the world’s largest EV market,” said the 5-star analyst. “We believe NIO is differentiating itself with its proprietary battery exchange as a service (BaaS) program, which could see tailwinds as it expands in Europe, the second largest EV market.”

There are catalysts ahead to look forward to. At least two new models (the EC7 and ES8) are coming this year – deliveries for the new EC7 are expected to start in May, followed by ES8 deliveries in June – and they follow on the heels of the recently launched ET7 and ET5, which also the two “go well”.

Rakesh also believes that the end of zero-Covid policies in China “could boost spending and contribute to better-than-expected demand in 2023.”

Rakesh notes some “key risks” to NIO’s expansion plans. These include increasing competition as traditional premium automakers get in on the action and bring new models to market. Then there’s Tesla, which is still a leader in terms of volume and charging infrastructure.

On a positive note, Tesla also comes up when Rakesh examines NIo’s valuation relative to the EV leader. “We continue to see NIO diversifying with its BaaS model and at a >60% discount to TSLA at ~2.5x C24E P/Sales, makes it attractively valued in our view,” he summarized.

To that end, Rakesh rates NIO shares a Buy to follow with a price target of $28. This rate leaves room for one-year gains of 140%. (To watch Rakesh’s record, Click here)

Looking at the consensus analysis, based on 11 buys versus 4 holds, the analyst view is that this stock is a moderate buy. Going from the $16.62 target, shares will change hands at a 42% premium from now. ((See Nio stock prediction on TipRanks)

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Disclaimer: The views 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.

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