JPMorgan Upgrades NIO to Neutral from Underweight, Raises Price Target to $5.4 from $4.8

The outlook for Nio is improving, but it’s still murky, according to JPMorgan.

Analyst Nick Lai upgraded the Chinese electric vehicle maker to neutral from underweight. He also raised his price target on U.S.-listed shares to $5.40 per share from $4.80, though the new forecast calls for a 6% decline over the next year.

The stock has been on a tear recently, surging 48% over the past month. However, it’s down more than 36% year to date, as the global EV market faces waning demand.

Lai had downgraded Nio to underweight in February due to slowing sales momentum. Now, the analysts sees two catalysts that could continue the stock’s recent surge: “1) Chinese government stimulus
policy to boost auto demand including NEV which NIO should also benefit from; and 2) NIO’s latest battery as a service (BaaS) strategy by lowering buyers’ monthly rental fee (by ~25%) has not only successfully boosted store traffic and BaaS take rate ... but also driven its sales momentum.”

Shares rose more than 2% in the premarket following the rating change.