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Nio Upgraded at UBS on Demand and Execution - Price Target Up

Nio's “operational improvements in 2020 around sales volume” came in “well ahead" of expectations, UBS said in upgrading the electric-car maker.
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Nio  (NIO) - Get NIO Inc. (China) Report shares on Tuesday jumped after UBS analyst Paul Gong raised his rating on the Chinese electric-car maker to neutral from sell and jacked up his share-price target to $16.30 from $1.

Nio American depositary receipts recently traded at $17.24, up 15%. They have more than quadrupled this year.

Gong is impressed with worldwide customer demand for electric vehicles and Nio’s execution.

“Operational improvements in 2020 around sales volume” came in “well ahead of our previous expectations,” he wrote in a commentary cited by Bloomberg.

The economic recovery in China is another positive, Gong said.

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“Urgent concerns” concerning Nio’s balance sheet “have been assuaged” by Nio raising capital, although it “will continue to need cash and potentially raise more capital to fund its rapid growth,” Gong said

Also tempering his enthusiasm is Nio’s “elevated” valuation. “Limited visibility on growth, execution and competition mean a wide range of outcomes are still possible,” Gong said.

Analysts at Piper Sandler and J.P. Morgan also increased their share-price targets for Nio this month, following a 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," as there is a lot of hype around the electric vehicle sector these days.

J.P .Morgan 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.