Nio (NYSE: NIO) shares have dipped 2.1% premarket, but one analyst believes the worst may finally be over for the company's shares.
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The Chinese electric vehicle company's premarket decline is due to further outbreaks of Covid in China, which have resulted in fears of fresh Covid restrictions in the country and stocks sliding due to the potential economic fallout.
Nio shares closed last week at $10.47, down over 68% in 2022.
However, in a note to clients on Monday, Deutsche Bank analyst Edison Yu revealed the firm is raising their price target on Nio to $21 from $20, keeping a Buy rating on the shares.
The analyst acknowledged that Nio “continues to frustrate” investors with further operational issues which are holding back volume in the fourth quarter, but he is “optimistic that the worse may finally be over.”
Yu explained that his view is backed up by the Chinese government's gradual move away from its Covid zero policy. However, the analyst added that the key will be to watch December sales as Nio will probably need to deliver something close to 20,000 units in volume to demonstrate its execution is improving.
Yu's view is in contrast to UBS analyst Paul Gong, who downgraded Nio to Neutral from Buy with a $13 price target last week. Gong told investors he expects execution challenges to weigh on the stock, and the company's monthly sales volume did not show obvious improvement.