Investing.com -- HSBC upgraded NIO to Buy from Hold in a note on Friday, arguing the electric-vehicle maker is entering a new cycle marked by stronger volumes, a better product mix and clearer earnings visibility into 2026.

Yuqian Ding, HSBC’s head of China autos research, said the bank now has “better visibility and stronger conviction on 2026e volume growth and earnings improvement trajectory.”

The NIO price target was raised to $6.80 from $4.80 per share.

The upgrade follows NIO’s first-ever quarterly net profit in the fourth quarter of 2025, when the company posted earnings of RMB0.12 billion.

Ding wrote that “vehicle volumes increased 43% q-o-q and 71% y-o-y, significantly outperforming the broader EV market,” while the vehicle gross margin rose to 18.1%, helped by stronger ES8 deliveries. Cost control also supported profitability as SG&A and R&D each fell 15% quarter-on-quarter.

HSBC expects “above-industry visibility for earnings in 1Q26,” aided by continued mix benefits and reduced disruption from subsidies.

Order momentum remains strong, with HSBC noting that in January and February, NIO delivered 48,000 vehicles, up 77% from a year earlier.

Ding stated that the next product cycle, including the ES9, ONVO L80 and a new large SUV due in the third quarter, should “further lift volumes and sustain an improved product mix.” The bank now sees a roughly 20% rise in NIO’s average selling price in 2026.