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On Friday, Morgan Stanley (NYSE:MS) analysts maintained their Overweight rating and $5.90 price target for NIO Inc . (NYSE:NIO), despite the company’s reported fourth-quarter net loss exceeding expectations. The prominent player in the automotive industry, currently valued at $9.9 billion, has shown resilience despite challenging market conditions. According to InvestingPro data, analyst targets for NIO range from $3.90 to $12.49, reflecting diverse market opinions about this volatile stock. NIO’s net loss for the quarter was approximately 7.1 billion Chinese yuan (RMB), compared to a 5.1 billion RMB loss in the previous quarter and expectations of a 5.8 billion RMB loss. The full-year losses totaled 22.4 billion RMB, up from 20.7 billion RMB in 2023.
NIO’s overall revenue for the fourth quarter grew by 6% quarter over quarter to 19.7 billion RMB, meeting the lower end of the company’s guidance, which ranged from 19.7 to 20.4 billion RMB. The vehicle gross margin remained flat quarter over quarter at 13.1%, falling below Morgan Stanley’s estimate of 14.1%. InvestingPro analysis reveals that NIO’s trailing twelve-month gross profit margin stands at 8.65%, highlighting ongoing profitability challenges. For deeper insights into NIO’s financial health and more exclusive ProTips, subscribers can access the comprehensive Pro Research Report. However, the non-vehicle gross profit margin (GPM) turned positive, which helped improve the overall group GPM to 11.7%, a 1 percentage point increase from the previous quarter and in line with Morgan Stanley’s estimate of 11-12%.
The company’s operating expense ratio remained relatively stable, with research and development (R&D) costs increasing by 10% quarter over quarter and selling, general, and administrative expenses (SG&A) rising by 19% due to channel expansion of Onvo. Notably, NIO reported a non-operating loss of 528 million RMB in the fourth quarter, largely attributable to losses from the revaluation of its overseas RMB-related assets, according to the company’s statement.
Looking ahead, NIO provided guidance for the first quarter of 2025, projecting vehicle deliveries between 41,000 and 43,000 units, which represents a decrease of 41-44% quarter over quarter. Based on InvestingPro’s Fair Value analysis, NIO currently appears undervalued despite its challenges. The company maintains a strong balance sheet with more cash than debt, though analysts don’t expect profitability this year. Investors seeking detailed valuation metrics and comprehensive analysis can explore InvestingPro’s exclusive financial health scores and advanced stock screening tools. However, this implies a moderate increase to approximately 13.6-14.6k units for March, compared to an average of 13.5k units in January and February. Revenue guidance for the quarter is set at 12.4-12.9 billion RMB, indicating a sequential average selling price (ASP) increase in the low teens for the first quarter. Investors are keeping a close watch on the upcoming NT 3.0 facelifts for the NIO brand and the company’s restructuring efforts aimed at cost reduction.
In other recent news, NIO Inc. has seen a downgrade from JPMorgan, which adjusted the company’s stock rating from Overweight to Neutral and reduced the price target to $4.70 from $7.00. This change reflects a more cautious outlook on NIO’s future revenue and earnings potential, with JPMorgan lowering its revenue and earnings estimates for the fiscal years 2025 and 2026 by 7-10% and 13%, respectively. Despite this, the analysts still project a 50% increase in NIO’s vehicle sales for the current year. In the realm of technological innovation, NIO has surpassed Tesla (NASDAQ:TSLA) in Wards Intelligence’s Software-Defined Vehicle (SDV) ranking, now holding the second position. This ranking highlights NIO’s advancements in software capabilities within the automotive industry. Meanwhile, China’s broader automobile market experienced a 12% decline in car sales in January, although sales of new energy vehicles, including electric vehicles and plug-in hybrids, rose by 10.5% year over year. Notably, Chinese electric vehicle manufacturers, including NIO, experienced a rise in their stock prices in Hong Kong, driven by a promising sales outlook and the recent decline in Tesla’s stock. According to the China Passenger Car Association, February retail sales of new-energy cars increased by 80% to 686,000 units.
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