On Monday, Citi updated its stance on NIU Technologies (NASDAQ:NIU), a manufacturer of electric scooters, by increasing its price target on the company's shares to $2.40, up from the previous target of $2.00. The firm maintained its Neutral rating on the stock.
The adjustment came after NIU Technologies reported its first-quarter results for 2024, which presented a mixed performance. The company's e-scooter sales volume and revenue showed positive growth, with a 21% year-over-year increase and a 5% quarter-over-quarter rise.
However, the company's bottom line did not meet analyst expectations, as its non-GAAP net loss widened by 5% year-over-year, totaling a loss of roughly 48 million Chinese renminbi (RMB).
The underlying factors contributing to the results included a significant recovery in e-scooter sales volume, which was up 37% compared to the same period last year, though there was a 6% decrease from the previous quarter.
This was somewhat counteracted by a 10% year-over-year drop in the blended average selling price (ASP), despite a 14% increase from the last quarter. Additionally, the gross margin suffered, falling by 2.7 percentage points year-over-year to 18.9%, influenced by an unfavorable shift in product mix and changes to the distributor rebate policy.
In light of the recent financial performance and market conditions, Citi has made adjustments to its non-GAAP net profit projections for NIU Technologies for the years 2024, 2025, and 2026, decreasing the 2024 forecast by 6% but raising the 2025 and 2026 estimates by 12% and 13%, respectively.
The new price target of $2.40 is based on a price-earnings-growth (PEG) ratio, with the multiple remaining unchanged.
InvestingPro Insights
Following Citi's recent update on NIU Technologies, a glance at the real-time data from InvestingPro provides additional context for investors considering the company's stock. NIU holds a market capitalization of $168.23 million, indicating its size within the Automobiles industry, a sector where it is recognized as a prominent player. With a negative P/E ratio of -4.48 for the last twelve months as of Q4 2023, the company's stock trades with high price volatility, a factor that traders might capitalize on or approach with caution depending on their strategy.
InvestingPro Tips highlight that NIU's stock is currently trading at a low revenue valuation multiple, which could suggest a potential undervaluation relative to its sales. Moreover, the company is not profitable over the last twelve months, but analysts predict that NIU will turn a profit this year. This anticipated shift towards profitability may influence investor sentiment and the stock's future performance.
For investors seeking a deeper dive into NIU Technologies' financial health and stock performance, additional InvestingPro Tips are available, providing insights such as the company's liquidity position and recent price trends. There are 12 additional tips accessible for NIU Technologies on InvestingPro, which can be a valuable resource for making informed investment decisions. To access these insights and more, investors can visit https://www.investing.com/pro/NIU and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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