It’s a new month, so investors get fresh delivery data from Chinese electric-vehicle makers.
Tuesday morning, NIO (ticker: NIO) reported that it delivered 6,711 vehicles in May. That’s down from 7,102 in April. A sequential dip might not be what investors wanted to see, but there is plenty of good news for them to focus on. Shares are rising as a result.
NIO blamed the global semiconductor shortage for the decline, but also said “the company will be able to accelerate the delivery in June to make up for the delays from May.” A lack of microchips has constrained automotive production around the globe for months.
NIO, however, left its forecast for second-quarter deliveries unchanged at 21,000 to 22,000 vehicles. That implies up to 8,200 vehicles will be delivered in June, which would be a monthly record. Rising deliveries in June would also signal the global semiconductor shortage is easing. That would be good news for NIO, as well as all other car makers.
In another positive development, Citigroup analyst Jeff Chung upgraded shares to Buy from Hold, though he left his target for the stock price essentially unchanged at about $58 a share. Chung downgraded shares in January amid rising competition in China, but he now feels better about overall EV sales there.
With the upgrade, about 68% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P is roughly 55%.
The average target price for the stock is almost $60 a share, implying big gains from recent levels. The stock’s recent struggles have magnified the potential surge. Coming into Tuesday, shares were down about 21% year to date and off 42% from their January 52-week high.
The chip shortage; rising interest rates, which hit highly valued, high-growth stocks more than others; and new competition in the Chinese EV market are some of the reasons for the stock’s weakness. Another key factor is that the stock rose more than 1,100% in 2020, so some weakness might have been expected.
Write to Al Root at email@example.com