Citi analyst Jeff Chung upgraded the stock rating of Chinese EV maker Nio (NYSE: NIO) from "Neutral" to "Buy" with a price target of $33.20 from $18.10.

The analyst raised expectations for the company's delivery volume and margins, as well as the stock's valuation multiplier.

Chung expects Nio's cumulative backlog of orders to increase 100% from the end of September to 7,000 units, which will significantly improve its margins.

Chung added that he raised his forecast for Nio's 2021 to 2025 sales because he believes the state is likely to introduce supportive policies to spur demand.

Earlier today before the market open, JP Morgan analysts led by Nick Lai raised their price target on Nio sharply to $40.

Nio shares closed at $21.62 on Tuesday, and JP Morgan's price target means Nio has 85% upside potential.

JP Morgan's last rating on Nio was Neutral and was made on June 21, when the price target was $14.

In its latest report, JP Morgan gave Nio an Overweight rating and admitted that "we missed the stock's major rally YTD."

The report said Nio remains attractive from a long term perspective.

Nio shares surged by about 24 percent to trafe at $26.78 as of press time.