© Reuters Deutsche Bank remains bullish on Nio (NIO)
By Michael Elkins
Deutsche Bank reiterated a Buy rating and $21.00 price target on Nio (NYSE:) following the company’s guidance cut last week. In just the past few quarters, NIO has encountered issues with metal casting parts, EDS assembly, silicon carbide supply, and most recently delivery logistics. However, analysts at the bank believe that operational frustrations surrounding the Chinese automaker will end, especially in the context of Li Auto (NASDAQ:) and Xpeng (NYSE:) meeting/beating estimates and Zeekr managing to exceed its overall 2022 target which was set at the beginning of last year.
The company’s recent problems led to 4Q22 deliveries of only 40K, below initial guidance of 43K-48K, and December exiting at just 15.8K, below expectations of ~20K. Deutsche Bank believes this reflects concern about management’s ability to execute especially when it has ambitions to launch two other auto brands and expand meaningfully into Europe.
Deutsche Bank analysts wrote in a note, “At the core, our sense is the company has been overly aggressive in trying to deploy new manufacturing process technology and simply not focused enough on supply chain risk mitigation. It is not clear if this is a structural or personnel issue (or both) but we think management team is now very aware of these shortcomings and would expect better execution in 2023.”
The analysts wrote that they anticipate that “all outstanding operational bottlenecks will be addressed by the end of the first quarter.”
Shares of NIO are up 3.08% in premarket trading on Tuesday.
Be the first to comment