Investing.com -- Goldman Sachs has upgraded NIO (HK:9866) (NYSE: NIO) stock to Buy from Neutral and raised its 12-month price targets to $7.00 for the American Depositary Receipts (ADRs) and HK$55 for the Hong Kong-listed shares, implying upside of around 47%, respectively.

The bank’s upgrade of Nio reflects expectations that the company will deliver "not only one of the fastest volume growth, but also a premium margin profile and strong profit/FCF turnaround in 2026E.”

Shares in the electric vehicle maker rose 2% in U.S. premarket trading by 08:49 ET (12:49 GMT).

Goldman analysts pointed to the successful launch of Nio’s new ES8 and ES9 models, which have captured the No. 1 position with 39% market share in China’s new-energy-vehicle (NEV) segment priced above 400,000 yuan, along with strong brand power. Despite a 14% year-over-year decline in the broader domestic NEV market in the first half of 2026, Nio’s volume grew 67% over the same period.

Goldman forecasts full-year 2026 volume and revenue growth of 43% and 60%, respectively, alongside a swing to adjusted net profit of 1.6 billion yuan from a loss of 12.4 billion yuan in 2025. Free cash flow is expected to improve from negative 3.1 billion yuan in 2025 to positive 12.1 billion yuan in 2026.

Nio shares are down 6% year-to-date and 32% from their April 2026 peak, a trend Goldman described as "disconnected from the company’s improving fundamentals."

The analysts highlighted that Nio trades at a 25% to 29% discount to pure-EV peers on 2026-2027 price-to-sales multiples and a 17% discount on 2027 price-to-earnings, which they see as attractive given the company’s product momentum.

“Catalysts include ramp-up for ES8 five-seater version delivery, profit improvement in earnings results,” the analysts noted.

Goldman’s 2026-2028 earnings estimates sit 30% above Visible Alpha consensus, driven by higher revenue and lower operating expenses, as the brokerage expects Nio’s premium brand strength to support more stable pricing and more efficient marketing spend. The Wall Street firm raised its 2026-2028 earnings estimates by 1% to 9%, mainly reflecting higher gross margins tied to strong ES8/ES9 sales.

Looking ahead, analysts said Nio could apply a similar turnaround strategy to its 5 series and 6 series models, priced between 200,000 and 400,000 yuan, to "rejuvenate the sales volume of these models in 2027E and beyond."