Nio Downgraded to Sell at Goldman Sachs

Nio’s 85% rally in the past month wasn’t accompanied by significant increases for volume and profit forecasts, Goldman Sachs says.
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Nio  (NIO) - Get Report shares fell in premarket trading Friday after Goldman Sachs analyst Fei Fang downgraded the stock for the second time in a month - to sell from neutral this time on valuation concerns.

He kept his share-price target at $7.

Nio’s 85% rally in the past month represents “over-optimism,” Fang wrote in a report. That’s because the surge wasn’t accompanied by significant increases for volume and profit forecasts.

Still, he believes in Nio’s long-term story thanks to China’s electric vehicle adoption, its affinity for premium cars and the "scarcity of being China's first home-grown high-end passenger vehicle brand."

Fang's recommendations have produced a negative 5% return in the past year, compared with a 292% return on the shares, according to Bloomberg. He has rated NIO neutral twice and buy twice in the past 16 months..

Earlier this month, Nio reported that its vehicle deliveries nearly tripled in June and in the second quarter from the year-earlier periods.

Nio delivered 3,740 vehicles in June and 10,331 in the second quarter. The second-quarter figure was more than double the first-quarter figure.

For the first half of the year, deliveries totaled 14,169.

In June, the company delivered 2,476 ES6s, the company’s 5-seater, and 1,264 ES8s, the six- and seven-seater models.

“In June, we achieved a historical high of monthly deliveries, contributing to our best quarterly performance,” William Bin Li, founder and chief executive, said in a statement.

Nio shares traded at $12.10, down 6.56%, and have soared 222% year to date through Thursday.