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NIO stock is under the microscope ahead of earnings;  Here’s what to expect

Most companies have already released their first quarter results, although some names have yet to release financial results for the quarter. Nio (NIO) is one of those, but before the market takes action on Thursday (June 9), the Chinese electric vehicle maker will hit the earnings plate.

While deliveries have already been announced for the quarter (NIO delivered 25,768 vehicles in the first quarter), Deutsche Bank analyst Edison Yu does not anticipate any big surprises, with the analyst expecting a ” on line”. As such, attention will turn to the company’s outlook for the second quarter and any commentary regarding the state of the supply chain following the reopening of Shanghai following the recent Covid lockdown.

For the second quarter, Yu calls for a slight sequential decline to 24,000 shipments, although this figure suggests a “significant sequential improvement” from May’s ~7,000 shipments, as Yu expects a significant improvement in the volume of month to month in June.

However, given the “lower volumes and the imbalance in the order book (i.e. orders placed before the price rise are filled with components purchased at newly high levels)”, Yu predicts also that gross margins will drop sequentially. The good news, however, is that it should represent the “low” of the year and with the reopening, NIO can “finally get back on track with its super product cycle this year”.

Having launched the ET7 in late March, Yu expects the ES7 SUV to be “officially unveiled” later in the month, while 2022 versions of the ES6, EC6 and ES8 – all featuring system upgrades infotainment – should also be revealed.

In total, Yu lowered his 2022E shipments estimate from 10,000 to 160,000, although the analyst is keeping his 2023 forecast intact – at 320,000. The figure suggests shipments will double year-on-year .

So, when it comes to business, what does all of this mean for investors? Yu maintained a buy rating on NIO shares, but to “account for the broader devaluation of growth stocks,” the price target is lowered from $50 to $45. Nonetheless, the new figure still leaves room for year-over-year growth of a generous 135%. (To see Yu’s track record, Click here)

It’s not often that analysts all agree on a stock, so when it does, take note. NIO’s Strong Buy consensus rating is based on 13 unanimous purchases. The stock’s $41.48 average price target is only slightly below Yu’s target and is expected to deliver returns of around 116% in the coming year. (See Nio’s stock forecast on TipRanks)

NIO stock is under the microscope ahead of earnings;  Here’s what to expect

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