Text size

NIO shares are down more than 40% this year.

Hector Retamal/AFP via Getty Images


the liquidation of the shares continues. But some on Wall Street still back the Chinese electric vehicle maker.

Nio’s US certificates of deposit (ticker: NIO) fell nearly 8% on Thursday after the company released disappointing shipment guidance and reported a sharp drop in margins. The ADR fell again on Friday, falling to $18.41.

JP Morgan analyst Nick Lai maintained his overweight rating on the stock and his $30 price target. He and other JP Morgan analysts said NIO’s forecast for second-quarter deliveries of 23,000 and 25,000 vehicles came as no surprise given the Covid-related lockdowns in China.

More important, Lai said, was “the path of production as well as the recovery in margins” in the second half of 2022. NIO said first-quarter margins fell to 14.6% from 19.5% one year earlier. The company attributed the decline to a “decline in vehicle margin and reduction in other sales margins resulting from increased investment in the power and service network.”

The analyst said NIO production is expected to increase “rapidly” with new model releases and easing supply constraints in the second half. It forecast sequential volume growth of 79% in the third quarter and 34% in the fourth quarter.

Analysts at Mizuho, ​​meanwhile, cut their price target on NIO shares to $55 from $60 but kept their buy rating, saying that despite near-term headwinds in the manufacturer of electric vehicles, the company “well positioned to [long-term] growth with secular growth and leadership in China with ongoing global expansion.

Write to Joe Woelfel at joseph.woelfel@barrons.com