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Investing.com -- JPMorgan analysts lowered their rating for Nio (NYSE:NIO) to Neutral from Overweight in a note Tuesday, citing concerns over earnings delivery and a more conservative outlook compared to consensus estimates.
The firm also set a new December 2025 price target of $4.70, down from $7 a share.
Nio’s stock struggled in 2024, falling 48%, while the MSCI China autos index rose 4%. "Our analysis suggests the main factor leading to the underperformance was earnings miss or weakness—consensus 2024 revenue and earnings were trimmed by 19% and 63% respectively throughout 2024," analysts wrote.
Given this backdrop, earnings performance will be a key factor in 2025, leading JPMorgan to revise down its revenue and earnings estimates for FY25-26 by 7-10% and 13%, respectively.
Nio’s strategy includes launching several new models, including the high-end ET9 sedan priced over RMB800,000.
"We appreciate this high-end product should help support margins, but its volume contribution could be limited given relatively smaller addressable market," the analysts noted.
They add that the company is also betting on its mass-market ONVO brand, which launched its first model, the L60 SUV, in Q4 2024, with two more SUVs expected in the second half of 2025.
Additionally, JPMorgan notes that Nio introduced its budget brand Firefly, debuting a compact sedan at Nio Day in December, with deliveries set to begin in Q2 2025.
JPMorgan estimates Nio’s 2025 sales will reach 334,000 units, a 50% increase from 2024 but still below management’s ambitious target of 440,000. "We will monitor closely Nio’s monthly sales run rate as well as order flow," analysts said.
JPMorgan prefers other Chinese automakers, stating, "Among OEMs, we like BYD (SZ:002594), Xiaomi (OTC:XIACF), followed by Geely and Xpeng (NYSE:XPEV)." The firm also highlighted Leapmotor (HK:9863) as a potential candidate for meaningful earnings upgrades.