Bank of America has downgraded Nio Inc (NYSE:NIO) to a Neutral rating (From Buy) with a 12-month price target of $9.00 on the Chinese auto stock following lower than expected sales growth and valuation.
Bank of America expects, emerging electric vehicle maker, Nio will encounter hurdles in its sales trajectory for the first three quarters of 2024 due to the absence of new model launches during this period. As a result, analysts are also expecting a potential slowdown in volume sales growth.
In addition to the absence of new models, analysts anticipate that NIO may resort to offering price discounts on existing models.
Moreover, increased spending on marketing campaigns and sales networks is expected to accompany the launch of NIO's second and third brands. This uptick in operating expenses is anticipated to exceed earlier projections.
Despite the downward adjustment, analysts maintain a positive view on NIO for two primary reasons. Firstly, they foresee a brighter sales outlook for the fourth quarter of 2024 and into 2025. Secondly, NIO's financial standing is expected to improve with the CYVN investment.
Shares of NIO are down 5.04% in afternoon trading on Tuesday