Mizuho lowers NIO stock price target amid strong China competition

On Tuesday, Mizuho (NYSE:MFG) analysts adjusted their outlook on NIO stock (NYSE: NIO), lowering the price target to $3.50 from $4.00 while maintaining a Neutral rating. This revision comes as NIO reported its March quarter revenue and earnings per share, which were RMB 12.0 billion and RMB (3.29), respectively. These figures were below consensus estimates of RMB 12.3 billion and RMB (2.54). According to InvestingPro data, NIO’s financial health score stands at "WEAK," with the company burning through cash rapidly despite holding more cash than debt on its balance sheet.

NIO provided guidance for the July quarter, projecting revenue of RMB 19.8 billion, slightly above the consensus of RMB 19.6 billion. The company also anticipates deliveries of 73,500 units, surpassing the consensus estimate of 69,900 units, marking an approximate 75% increase quarter-on-quarter. While the company has demonstrated strong revenue growth of 18.2% over the last twelve months, InvestingPro analysis reveals concerning gross profit margins of just 9.9%.

Key highlights from NIO’s outlook include stronger delivery guidance for June with the ramp-up of the 2025 model year refreshes and the Onvo/Firefly models. However, the company faces potential challenges due to strong competition in China, as April and May deliveries totaled approximately 23,000 units, with June deliveries guided at 26,500 units.

NIO expects its gross margins to improve with the launch of new models, targeting breakeven by the fourth quarter of 2025 and aiming for a 15% vehicle margin in 2025, with a longer-term goal of 25%. Mizuho analysts consider NIO fairly valued at 0.6 times the estimated 2026 price-to-sales ratio, slightly below the average of 0.8 times among Chinese peers, due to the intense competition in the region.

In other recent news, NIO Inc (NYSE:NIO). reported its unaudited financial results for the first quarter of 2025, noting a 39% decline in revenue quarter-over-quarter to Rmb12 billion, though this was a 21% increase year-over-year. Morgan Stanley (NYSE:MS) analysts reiterated an Overweight rating on NIO stock, observing a 2.9 percentage point decline in vehicle gross margin quarter-over-quarter. NIO provided revenue guidance of Rmb19.5-20.1 billion for the second quarter, suggesting a significant quarter-over-quarter increase. In April 2025, NIO delivered 23,900 vehicles, marking a 53% year-over-year growth in deliveries. Citi maintained its Buy rating on NIO shares with an $8.10 price target, anticipating new model launches and cost-saving synergies. NIO’s ONVO brand saw a 43% month-over-month increase in sales to 6,300 units, and the Firefly brand sold 3,700 units in its first month. Analysts from Citi expect NIO to deliver 63,000 units in the second quarter, with further increases projected for the third and fourth quarters. The company’s focus remains on expanding its market share and improving operational efficiencies in the electric vehicle sector.

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