Morgan Stanley reiterated an Overweight rating and a $12.00 price target on Nio Inc. (NYSE: NIO) after shares of the Chinese automaker gained 7.9% Monday night on rising volume expectations.

The company’s June sales topped 10k units with a strong sales ramp near the end of the month, up sharply from 6.3-6.7k in April-May. Additionally, NIO delivered 4.1k units of vehicles or +29% WoW in the last week of June (June 26 - July 2), hitting the YTD peak. Morgan Stanley now expects to see 15k units delivered in July, followed by a steady upwards trend towards September when the company looks to achieve 20k sales.

Tim Hsiao wrote in a note, “As highlighted in our recent store check note, NIO's overall new order intake hit a YTD high in June at 18-20k, boosted by the launches of ES6 and ET5 touring as well as price cuts. Overall, orders on hand equal two months of deliveries, providing better visibility.”

Hsiao added, “The company has suffered from serious supply constraints of parts, e.g. casting parts and controllers since 2022. Our recent checks suggest the disruption has now been alleviated. While the delivery of ES6 remains somewhat contained by shortfalls in certain tire rims, we believe it's manageable.”

Shares of NIO are up 1.58% in pre-market trading on Tuesday.

By Michael Elkins | [email protected]