Nio (NIO) traders normally have excessive expectations from the corporate dubbed the Tesla of China. Earlier than Thursday’s post-2Q21’s outcomes, within the prior 11 quarters, shares fell eight occasions following the quarter’s monetary report.
Going by Thursday’s motion, now you can make that 9 out of 12. Not that the outcomes had been unhealthy. In reality, there have been beats on the top-and bottom-line.
Income of $1.31 billion beat the estimates by $20 million and elevated by 127% year-over-year, whereas non-GAAP EPS of -$0.03 got here forward of the Avenue’s name by $0.08.
Wanting forward, the corporate anticipates between 23,000 to 25,000 deliveries in Q3, principally maxing out capability which at the moment stands at round 8,000 a month. Beforehand Nio anticipated to ship between 21,000 and 22,000 items. Q3 income is predicted to hit $1.44 billion, above the consensus estimate of $1.38 billion.
It’s attainable the share worth drop displays the uncertainty surrounding the continuing international chip shortages. Or possibly as J.P. Morgan’s Nick Lai believes, there are some points to remember past the headline numbers. Lai calls the outcomes a “blended bag, with margin reasonably shy of expectations on a weaker combine, whereas administration guided to increased D&A prices within the subsequent two to a few quarters.”
These near-term costs are as a result of the corporate has altered its accounting coverage to e book D&A (depreciation and amortization) sooner “in preparation” of the brand new NT2 platform – Nio’s second-generation autonomous driving platform.
“However,” provides Lai, “Administration indicated the corporate will launch three new fashions in 2022 (vs our earlier expectation of 1) on new manufacturing structure, which drives increased profitability than the primary era of manufacturing platform; it is a optimistic shock and must be welcomed by traders.”
Lai expects Nio’s gross sales will virtually double in quantity subsequent yr, projecting roughly 173,000 items in 2022 in comparison with 93,000 in 2021 and 44,000 the earlier yr.
All in all, Lai stays a Nio bull, sticking with an Chubby (i.e., Purchase) ranking and $70 worth goal. Buyers stand to pocket ~70% acquire ought to the analyst’s thesis play out. (To observe Lai’s monitor report, click on right here)
Wanting on the consensus breakdown, all of Lai’s colleagues agree. NIO inventory has a Robust Purchase consensus ranking based mostly on Buys solely – 6, in complete. There’s loads of upside projected too; the $65.17 common worth goal signifies share features of 58% on the one-year timeframe. (See Nio inventory evaluation on TipRanks)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is extremely vital to do your individual evaluation earlier than making any funding.