Investing.com — UBS upgraded Chinese electric vehicle maker Nio Inc to Buy from Neutral, saying its new models and a recent $1 billion equity raise have eased investor and consumer concerns over the company’s steep losses.
The brokerage lifted its price target on the U.S.-listed shares to $8.50 from $6.20 on stronger sales from new launches including the L90 and ES8 sport utility vehicle.
UBS said the company’s improved finances and progress toward breaking even could narrow its valuation gap with rival XPeng.
Nio has lost more than 100 billion yuan over the past decade, which had weighed on consumer demand.
But after the capital raise bolstered its balance sheet, and with management guiding to non-GAAP operating breakeven in the fourth quarter, UBS said “consumer confidence in the company has been restored.”
The ES8, priced above 400,000 yuan ($55,000), is expected to lift both revenue and margins, giving Nio an edge in average selling prices over XPeng.
UBS forecasts Nio’s fourth-quarter revenue growth could be about 50% higher than XPeng’s, helped by a richer product mix.
Despite the recent share offering, Nio’s market capitalization remains about a quarter smaller than XPeng’s. UBS argued that as losses shrink and margins improve, the discount should fade.
The brokerage raised its 2025 and 2026 revenue forecasts by up to 36% and expects the company to reach free cash flow breakeven in 2026. It estimates Nio will end 2025 with net cash of 21 billion yuan.
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