Nio’s Rating Cut at BofA Securities

Bank of America revised its rating for Nio (NYSE:NIO) from Buy to Neutral, setting a 12-month price target at $9.00 for the Chinese electric vehicle company. This adjustment follows Nio's lower-than-expected sales growth and a reassessment of its valuation.

The financial institution projects that Nio, as an emerging electric vehicle manufacturer, will face challenges in sales for the first three quarters of 2024, primarily due to the lack of new model introductions during this period. Consequently, a potential deceleration in the growth of volume sales is anticipated.

Analysts also predict that Nio might implement price reductions on its existing models to stimulate sales. Additionally, the launch of Nio's second and third brands is expected to bring about increased marketing and sales network expenditures, likely to surpass previous estimates of operating costs.

Despite these concerns, analysts at Bank of America still hold a positive long-term view of Nio for two main reasons. First, they expect a more promising sales outlook for the fourth quarter of 2024 and into 2025. Second, they believe Nio's financial health will benefit from the CYVN investment.