Morgan Stanley raises Nio price target to 6.50, keeps Buy rating as restructuring and Onvo demand fuel optimism
Morgan Stanley analyst Tim Hsiao has increased his price target on Nio (NIO) to 6.50 from 5.90, while maintaining a Buy rating. The upgrade reflects optimism over Nio’s ongoing restructuring and solid early demand for the new Onvo brand, signaling long-term confidence in the company despite some near-term hurdles.
Key forecast updates
– 2025 deliveries trimmed to 330,000 units, down 9% from prior estimates, due to softer performance in the first half of the year.
– 2026 and 2027 deliveries unchanged at 470,000 and 586,000 units, respectively, helped by strong demand for the Onvo L90 SUV.
– Gross margin estimates are nudged higher for 2026 and 2027 by 0.2 percentage points, reflecting a shift toward more profitable models; 2025 margins are left unchanged.
– Operating expenses for 2025 are reduced by 10%, highlighting the impact of ongoing restructuring and cost-cutting, including workforce reductions. Net loss estimates are narrowed by 8% for 2025, 13% for 2026, and 9% for 2027.
Upcoming results and current consensus
– Nio is slated to report its Q2 results on September 2, which could provide additional clarity on restructuring progress and delivery momentum.
– Wall Street consensus remains a Hold on NIO, based on three Buy, seven Hold, and one Sell in the past three months. The average target of 4.69 implies about 7.6% downside versus current levels.
Summary
The upgrade signals that Wall Street sees meaningful upside from Nio’s restructuring and the onboarding of Onvo beyond the near-term soft patch. While short-term profitability remains under pressure, the improved cost structure and a more favorable product mix could bolster margins in the coming years if Onvo demand holds up and deliveries recover.
Additional context and analysis
– The reduction in 2025 delivery estimates acknowledges current softness, but the steady outlook for 2026–2027 suggests the market expects a catch-up as Onvo gains traction and efficiencies from restructuring take hold.
– The modest uptick in long-term gross margin assumptions indicates belief that higher-margin models and better cost control can offset ongoing investment needs.
– Investors will be watching the Q2 print closely for confirmation of cost-saving effects and any early signs of improved unit economics under the Onvo roadmap.
Positive outlook note
If Onvo’s demand proves durable and the restructuring continues to bear fruit, Nio could see a more favorable margin trajectory and clearer path to profitability in the mid-term, supporting a renewed investment thesis for the stock.
Potential considerations for readers
– Monitor Q2 results on September 2 for updated delivery numbers, gross margin trends, and the pace of cost cuts.
– Consider how sustained Onvo demand interacts with macro conditions and competitive dynamics in China’s EV market.