Citi analyst Jeff Chung reiterated a Buy rating on Nio (NYSE: NIO) stock and hiked the price target to $19.20 per share from the prior $13.90.

The new price target implies an upside potential of about 30%. Chung believes Nio’s short-term momentum could sustain into September for 4 following reasons:

1. “Our industry checks suggest NIO’s order intake remained strong this week with WoW order intake tracking at stable, vs other OEMs seeing a WoW decline;
2. The company is due to launch EC6 in Aug-23;
3. Sep/Oct-23 high season is ahead which is likely to drive solid seasonal QoQ improvement into 4Q23E at sector level; and
4. We expect NIO’s monthly run-rate to further accelerate to 25-30k in 4Q23E.”

Another positive that could help Nio stock to re-rate higher is the potential cooperation with German luxury brands on battery swap facility.

“NIO has a competitive advantage in this area,” Chung wrote in a note.

“We remove the High Risk rating as the stock now has a long trading history, with full-year sales volume potentially exceeding 200k units this year. We believe the company’s corporate governance and long-term growth visibility have also improved.”

Nio stock leaped 2.5% higher in pre-open Monday. Shares are up 51% year-to-date.

By Senad Karaahmetovic