Stock Analysis

These Analysts Think NIO Inc.'s (NYSE:NIO) Sales Are Under Threat

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NYSE:NIO
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Market forces rained on the parade of NIO Inc. (NYSE:NIO) shareholders today, when the analysts downgraded their forecasts for this year. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative. The stock price has risen 5.7% to US$9.40 over the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the most recent consensus for NIO from its 30 analysts is for revenues of CN¥66b in 2023 which, if met, would be a sizeable 33% increase on its sales over the past 12 months. Before the latest update, the analysts were foreseeing CN¥83b of revenue in 2023. The consensus view seems to have become more pessimistic on NIO, noting the measurable cut to revenue estimates in this update.

View our latest analysis for NIO

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NYSE:NIO Earnings and Revenue Growth June 20th 2023

Notably, the analysts have cut their price target 17% to CN¥79.56, suggesting concerns around NIO's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values NIO at CN¥20.01 per share, while the most bearish prices it at CN¥6.70. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting NIO is an easy business to forecast or the underlying assumptions are obvious.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The period to the end of 2023 brings more of the same, according to the analysts, with revenue forecast to display 46% growth on an annualised basis. That is in line with its 53% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 17% annually. So although NIO is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of NIO's future valuation. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of NIO going forwards.

Looking to learn more? We have estimates for NIO from its 30 analysts out until 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether NIO is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.