Bank of America Upgrades its Nio Stock Price Forecast

Summary:
• The Bank of America has bumped up its Nio stock price forecast on improved sales outlook and an attractive valuation.

Bullish Nio stock price forecasts have hit the market after the Bank of America upgraded the stock of the Chinese electric vehicle (EV) maker to BUY. This upgrade is responsible for the demand for the stock, as it rumps to a gain of nearly 5% on the day. The stock is now on course to a 3rd winning session, following the 3.07% and 9.24% uptick of the last two trading days. 

An analyst at Bank of America upgraded the stock from neutral to buy, setting a price target of $26.00. This new price is $1 higher than the previous one. It also gives the stock a potential upside of 74.73%. The company’s improved sales, better-than-expected margins, and a more attractive stock valuation are reasons BofA’s analyst has proferred for the upgrade.

The launch of the ES7 in June and that of the ET5 in September are expected to drive improvement in sales. Continuation of the ET7 sedan deliveries that began in March is also expected to boost sales figures. Other models, such as the ES6 and ES8, are undergoing upgrades. Several of these models have sizeable pending orders. 

The Bank sees the company’s valuation at 1.7X 1-year forward EV sales, which “seems attractive given the improving outlook.” The last time Nio stock price had such a valuation was when the company faced headwinds from a slowdown in sales, product recalls and liquidity crunch.

However, the fundamentals are much better this time around, making the valuation an attractive one, the Bank’s analyst noted. The Nio stock price forecasts look positive, even as the shares move towards a challenge of a key resistance mark.

Nio Stock Price Forecast

The decline of 5 May and the extended move south until the 12 May low negated Nio stock price forecasts of recovery based on the falling wedge. However, the 3-day uptick from the 12 May low has put the price back on the path to challenging the barrier at 15.88 (14 March and 6 May highs).

A break of this barrier also removes the upper border of the invalidated wedge, which clears the path toward 17.87 (27 April and 3 May highs). Above this level, additional barriers are seen at the 19.48 and 22.26 price marks (2/31 March highs). 

On the flip side, rejection at the 15.88 resistance allows for a pullback that targets 14.31 (11 May high and 17 May low in role reversal). Additional targets to the south can be found at 13.16 (15 March 2022 low) and at 10.91 (24 July 2020 low). 

Nio: Daily Chart