On Friday, Jefferies adjusted its price target for NIO Inc. (NYSE: NIO), a leading electric vehicle manufacturer, to $5.10, down from the previous $5.50. Despite the reduction, the firm maintained its Hold rating on the company's stock.
The adjustment follows NIO's reported financial results for the second quarter of 2024, which showed a significant year-over-year revenue increase of 98.9% to RMB 17.4 billion. The company also managed to narrow its net losses by 2.5% quarter-over-quarter to approximately RMB 5.1 billion.
The quarterly performance of NIO indicated that the vehicle margin remained consistent with management's expectations at 12.2%. For the third quarter of 2024, NIO has set a delivery target of between 61,000 and 63,000 units, aligning with projections.
Looking ahead, NIO anticipates its overall vehicle margin will reach 15% in the fourth quarter of 2024 and is aiming for a gross profit margin (GPM) of 25% for the NIO brand in the longer term.
Jefferies noted that while NIO is expected to benefit from better operating leverage due to the commencement of mass deliveries of its L60 model, the company's profitability outlook for the second half of the year remains uncertain. The firm cited potential challenges arising from the expansion of sales channels and the construction of new battery swap stations as factors that could impact NIO's profit trajectory.
In light of these considerations, Jefferies has made slight revisions to its earnings per share (EPS) estimates for NIO for the years 2024 and 2025, setting them at RMB -10.2 and -5.4, respectively. The price target for NIO's shares listed in the United States has been set at $5.10, with a corresponding target of HKD 37.5 for the company's shares traded in Hong Kong.
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