CLSA analysts cut the rating on Nio (NYSE:NIO) to Outperform on Wednesday citing slower growth documented in the company’s fiscal Q4 2023 report.
The broker also reduced estimates and trimmed the target price from $9.8 to $6.
“NIO’s 4Q23 revenue fell 10.3% QoQ to Rmb17.1bn and its net loss rose 20.8% QoQ to Rmb5.59bn. As NIO did not reach enough scale in 4Q it saw high unit expenses per vehicle, thus resulting in a larger net loss,” the analysts highlighted.
Meanwhile, the carmarker’s vehicle margin saw a slight improvement, up 0.9 percentage points to 11.9%, primarily due to lower material costs and inventory provisions.
Looking forward, CLSA anticipates that NIO's new sub-brand, Alps, set to launch in the third quarter of 2024 with mass deliveries beginning in the fourth quarter of 2023, will offer attractive cost-performance benefits.
The company has also been consistently advancing in building its battery-swapping network, with a goal to have over 3,300 swapping stations by the end of the year, the investment firm added.
“However, seeing slower growth we lower our estimates, switch to a P/S valuation with slow profitability improvement, cut our target price from US$9.80 to US$6.00, and downgrade our rating from BUY to O-PF,” the analysts said.
CLSA reduced its revenue forecasts for 2024 and 2025 by 23% and 34%, respectively, and updated its net loss projections for 2024 and 2025 to Rmb15.7 billion and Rmb13.1 billion, respectively.
The stock was down 1.5% in premarket trading Wednesday.