Nio Jumps 5% on Citigroup Upgrade

While the electric vehicle giant's deliveries slipped in May, analyst Jeff Chung sees a strong ending for the second quarter.
Anthony RussoJun 01,2021,14:41

Shares in Nio (NYSE: NIO) rose 5% in early trading Tuesday after it received an upgrade from Citigroup despite delivering fewer cars in May when compared with the previous month.

The Shanghai-based electric vehicle maker said Tuesday that it delivered 6,711 vehicles last month, down from 7,102 units in April. Also, the year-over-year growth slowed down to 95% in May compared with 125% from the previous month.

Nio attributed the slowdown in the quarter to the semiconductor shortage, which has impacted many in the auto industry.

“In May, the Company's vehicle delivery was adversely impacted for several days due to the volatility of semiconductor supply and certain logistical adjustments,” Nio said in a statement today.

However, Nio shares gained today thanks to Citigroup analyst Jeff Chung upgrading its stock to a “Buy” from “Hold.” Chung, who kept the same price target of $58.30 on the stock, expects Nio’s orders to improve for the last two months of the second quarter. Furthermore, he notes that the stock is a “good re-entry point for the long-term investors.”

"We sense a strong demand recovery from late Apr-21 in China NEV after SH auto shows, and expect NIO’s monthly new order volumes in May-Jun to be 20-30% higher than the average monthly level in 4Q20 peak season,” The analyst said, as cited by StreetInsider.

“We raise our 2021E/22E/23E sales volume to 90k/ 155k/ 225k – following China white goods and smartphone evolutionary trend. We expect NIO to further gain market share from other JV brands with slower than expected ramp-up pace in China."

Meanwhile, Chung wasn’t as bullish on Nio’s smaller EV rival Li Auto (Nasdaq: LI) today. While Chung kept his “Buy” rating on Li’s shares, he lowered his price target from $45.60 to $43.60. However, Li gained 4% in early trading today anyways.

Separately today, shares of XPeng jumped 5% in morning trading after it said it delivered 5,686 vehicles in May. That number surged 483% year-over-year. Currently, Chung rates XPeng’s shares as a “Buy” with a $50 price target.

In addition, Nio reiterated its previous guidance and expects vehicle deliveries in the range of 21,000 and 22,000 for the second quarter.

Topics:Nio, XPeng, Li Auto.