Compared to TSLA, NIO stock has attractive value, analyst says

Compared to TSLA, NIO stock has attractive value, analyst says

There isn’t much discussion on the matter anymore, with most agreeing that the future of the automotive industry lies in electric vehicles (EVs).

Between 2022 and 2030, Mizuho analyst Vijay Rakesh predicts that sales of BEVs (battery electric vehicles) will grow at a CAGR (compound annual growth rate) of 22% globally and could be “resilient to macro risks associated with higher interest rates while the global marketing track remains secular.”

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

And it is for one of the great Chinese players that Rakesh has high hopes this year. “We see Nio (NYSE:NIO) well positioned as a leader in premium electric vehicles in China, the world’s largest market for electric vehicles,” said the 5-star analyst. “We believe NIO is differentiating with its proprietary Battery Swap-as-a-Service (BaaS) program, which may see tailwinds as it expands into Europe, the second-largest market for electric vehicles.”

There are catalysts to look forward to; At least two new models (the EC7 and ES8) are launching this year – deliveries of the new EC7 are expected to start in May, followed by deliveries of the ES8 in June – and come on the heels of the recently released ET7 and ET5 . , which both “mount well”.

Rakesh also thinks the end of zero Covid policies in China “could boost spending and help drive better-than-expected demand in 2023.”

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

On a positive note, Tesla also pops up when Rakesh considers NIO’s valuation against the EV leader. “We continue to see NIO differentiate itself with its BaaS model, and with a >60% discount to TSLA at ~2.5x C24E P/Sales, makes it attractive, in our view,” he summarized.

To that end, Rakesh assesses that NIO shares a buy to go along with a price target of $28. This figure leaves room for gains over one year of 140%. (To see Rakesh’s track record, Click here)

Looking at the consensus breakdown, based on 11 buys vs. 4 takes, analysts’ opinion is that this stock is a moderate buy. Passing through the $16.62 target, the shares will change hands for a premium of 42% a year from now. (See Nio’s stock forecast on TipRanks)

To find great ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that brings together all stock information from TipRanks.

Disclaimer: The opinions 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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