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Chinese electric vehicle manufacturer Nio (NASDAQ:NIO) was back in the news on Wednesday. The Nio stock rallied strongly yesterday after its stock was upgraded by JP Morgan and managed to register gains of almost 20%. In this sort of situation, it is perhaps important for potential investors to take a closer look at the company and the analysis from JP Morgan.
JP Morgan Boost
Investment banking giant JP Morgan upgraded the Nio stock to buy on Wednesday and added that the Chinese electric vehicle maker is on track to be the winner of the high end Chinese electric vehicle space in the long run.
That is a major endorsement for the Nio stock and it was no surprise that the development was welcomed with great positivity by investors. The gains recorded by the stock were the largest one day rise that had been recorded since August.
Target Price Raised Considerably
A team of analysts headed by Nick Lai at JP Morgan had turned bullish on NIO. Having rated the share as a ‘buy’, the report also set the target price at $40 a share for the American Depository Shares of NIO. It is a significant jump from the earlier target price of $14 a share.
In this regard, it is also necessary to point out that the JP Morgan analysts have been found to be the most bullish on Nio from among the 15 that FactSet surveyed.
The new target price set by JP Morgan analysts reflects an upside of as much as 85% (from the closing price on Tuesday) for investors. The Nio stock has been on a strong rally this year so far and has gained as much as 500%.
Rationale
In the note published by JP Morgan, the analysts stated that they believe that Nio is going to be the ‘long term winner’ in the high-end electric vehicle segment in China.
At this point, the mass market is being led by Xpeng Inc. The research note went on to reveal that electric vehicle penetration had only been 5% up until last year. However, by 2025, that figure is going to be as much as 25%.
On top of that, the analysts also added that the declining costs of electric vehicle batteries by 2022 or 2023 are also going to be beneficial for Nio. The note added that Nio could go on to corner as much as 30% of the high-end passenger electric vehicle space.
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