Shares of Chinese electric vehicle maker NIO (NIO) - Get NIO Inc. (China) Report were down slightly Wednesday despite analysts at Piper Sandler and JPMorgan increasing their firm's price targets following Nio's healthy second-quarter earnings report.
Piper Sandler increased the firm's price target to $14 from $4 while maintaining a neutral rating on the stock.
NIO probably deserves more attention, analyst Alexander Potter wrote, following the "generally solid quarter" it reported on Tuesday as there is a lot of hype around the electric vehicle sector these days.
"NIO arguably relies too much on partners for core capabilities (especially self-driving systems, batteries, and vehicle manufacturing), but the company may attempt to internalize these functions over time," Potter said.
NIO shares were down 0.4% to $12.94 Wednesday morning.
This time last year, analysts at Piper Sandler were not sure NIO would be able to survive, but after the company reported higher-than-expected revenue and a narrower-than-expected net loss for the second quarter, the firm is more bullish on the company's future.
"A recent capital infusion makes for an atypical ownership structure -- but cash is cash, and with a fortified balance sheet and a well-established brand, we think NIO has a shot at earning the 'Tesla of China' moniker," Potter said.
Meanwhile, analysts at JPMorgan also raised the company's price target to $14 from $11 while maintaining its neutral rating.
Analyst Nick Lai projects a "meaningful" increase in new model launches, especially in the fourth quarter this year, that should be helped by the extension of the electric vehicle subsidy program in China that is helping fuel interest and sales in the country.
The firm raised its future shipment forecasts for NIO in 2022 and 2023 by 27% and 30%, respectively.
"Top-down, we are optimistic about the 'smart EVs' trend, which is particularly fast in China, incl. EV start-ups, and we believe penetration of [new energy vehicle] demand in China could accelerate from here, more than doubling from 5% in 2019 to 14% by 2025E," Lai wrote.