The team raised their forecast for Nio's deliveries in 2025 significantly to 750k from 465k.

(Image credit: CnEVPost)

Deutsche Bank analyst Edison Yu's team raised their price target on Nio after the EV maker's executive revealed that its order book has exceeded 10,000 for several months.

In a research note sent to investors Thursday, Yu's team raised their price target on Nio by $10 to $70, maintaining a Buy rating.

Nio closed Wednesday's trading up 0.48 percent to $41.50, and the target price implies an upside of about 69 percent.

Nio released data on November 1 showing it delivered 3,667 vehicles in October, down 27 percent from a year earlier and 65.5 percent from September.

The company's co-founder and president Qin Lihong said in an interview that Nio's factory in Hefei ran at full capacity for only 10 days in October, so deliveries were lower, but sales in October were excellent and reached a record high.

Qin said he could not disclose the number of new orders, but said, "It's definitely over 10,000, and we've been over 10,000 for several months in a row."

Nio has previously said it aims to deliver three models next year, including its flagship sedan ET7, Yu's team noted, adding that they don't think Nio's management will do a full refresh of its current models next year, as it believes it can still be competitive with the most competing German luxury models with minor updates.

Yu's team raised Nio's delivery forecast for next year from 150k to 160k and for 2023 from 245k to 285k.

Based on the latest delivery forecast, the team raised their price target on Nio by $10 to $70, still based on 8x 2023E EV/sales.

Meanwhile, Yu's team raised their forecast for Nio deliveries in 2025 significantly to 750k from 465k, assuming 7-8 models, including contribution from Europe and mass-market brand.

Nio plans to get its existing plant to 300k capacity under double shifts in the first half of next year, and its plant in NeoPark coming online in the second half of next year will bring about 300k additional capacity, meaning the company will have a total nominal capacity of 600k by the end of next year, the team said.

The team also said that Nio's European expansion plans are on track, with mass-market brands coming potentially sooner rather than later.

It's also worth noting that Nio will report unaudited third-quarter earnings next Tuesday, November 9, US time. Already released figures show it delivered 24,439 vehicles in the third quarter, up 100 percent year-on-year and up 11.6 percent from the second quarter.

(Graphic by CnEVPost)

Yu's team expects Nio to achieve RMB 9.33 billion in revenue, a gross margin of 17 percent and a vehicle margin of 18.6 percent in the third quarter, implying an EPS of RMB -0.82.

As a comparison, Nio had revenue of RMB 8.45 billion in the second quarter, with a gross margin of 18.6 percent and a vehicle margin of 20.3 percent.

Yu's team expects Nio management to give guidance of 24,000-25,000 units for Q4 deliveries, with the October downtime leaving monthly deliveries at only 3,667 units.

But its management said it added more than 10,000 orders in October and has done so for several months in a row, so Yu's team expects sequential monthly sales to pick up to more than 10,000.

The team expects Nio management's guidance for fourth-quarter revenue could be in the range of RMB 9.5 billion to RMB 10 billion.