June 18 – Nio (NYSE:NIO) received a ratings boost from Goldman Sachs (NYSE:GS) on Tuesday as the firm lifted its view to “Neutral” from “Sell,” citing recent cost-cutting steps and an already sharp decline in the Chinese EV maker’s shares.
The investment bank also nudged its 12-month price target slightly higher to $3.80 from $3.70, implying potential upside of about 9% from current levels.
Analyst Tina Hou pointed to Nio’s efforts to reduce expenses as a key driver of the revised outlook. The company has trimmed projects, reduced headcount, and streamlined operations in recent months in a bid to lower its operating costs by 20% to 25%.
Goldman expects these steps could help ease margin pressure and support profitability over the next few years. Hou projects a potential improvement in Nio’s bottom line of 4% to 10% over a three-year period.
Shares of Nio have slumped 25% since November 2024, when Goldman added the stock to its Sell list. Its Hong Kong-listed shares have dropped 28% in the same period.
Still, the firm remained cautious, noting weak demand trends and intense competition from rivals such as Tesla (NASDAQ:TSLA) and BYD (BYDDF). Concerns about Nio’s financial health also persist after it reported a drop in cash and investments to $3.6 billion from $5.7 billion in the March quarter.
Based on the one year price targets offered by 23 analysts, the average target price for NIO Inc is $4.96 with a high estimate of $8.99 and a low estimate of $3.00. The average target implies a upside of +44.23% from the current price of $3.44.
This article first appeared on GuruFocus.