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Morgan Stanley is standing by its bullish stance on Nio , even after the Chinese electric carmaker’s massive rally over the past two months. Shares of Nio have surged in recent weeks and rallied further after the company unveiled its ES8 SUV on Aug. 21. The model, which clocks in at 308,800 yuan ($43,000) under a battery subscription plan, is much more affordable than Nio’s premium SUVs, which typically come in between 338,000 yuan to 768,000 yuan. Deliveries for the new vehicle will begin in late September. NIO YTD mountain NIO YTD chart But despite Nio’s surge, Morgan Stanley analyst Tim Hsiao stuck by his overweight rating on the stock. The analyst’s price target of $6.50 per share is less than 3% above the stock’s Friday close. “NIO’s share price has risen 90%+ from the trough in June (vs. HSI +9%), reaching our price target of US$6.5/HK$50.7,” Hsiao wrote in the Monday note. “The stock upward movement has been self-reinforcing as investors believe NIO’s share price performance is correlated to capital markets’ willingness to finance its operation and strategic ambitions, which is also linked to its operational value and ability to navigate the accelerating auto industry shakeup.” The analyst also pointed out that the trading value of Nio shares has grown above $2.5 billion over the past two days. This is equivalent to the stock’s cumulative value over the last two weeks. In the note, Hsiao underscored robust ES8 pre-orders are the main catalyst for the stock’s rally. “Our checks suggest ES8 pre-orders (with Rmb5k refundable deposit) may have surpassed 30k at the weekend and kept rising,” he said. “While real demand still hinges on order conversion, constructive feedback underpin the market’s belief that ES8 could go viral as L90 did last month, underpinning a monthly run rate of 40-50k units for NIO Group from Oct.” Hsiao said there has been an uptick in sentiment towards Nio, reflecting a more positive stance from investors overall. “While debates on the sustainability of NIO’s recovery persist, we noticed a sharp decline in client enquiries on NIO’s underlying demand and execution risk,” he wrote. “We’ve been asked more about the upcoming L60 and L80 facelifts (both early next year).”
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