Earlier this month, Morgan Stanley reaffirmed its “Buy” rating on Nio (NIO), with the brokerage firm’s $5.90 price target representing about a 30.5% premium to the stock’s Monday close. The firm called the Onvo L90 launch a “major catalyst,” with analyst Tim Hsiao writing, “With all the pessimism in the price, we think the stock is like a call option” following strong pre-order momentum in Hong Kong.
Morgan Stanley argues that the L90 offers “aggressive specs” at a price point below ¥280,000, giving it an edge over both mid-range and premium rivals like the Li (LI) L9 or AITO M9. With standout features, a spacious interior, and the backing of Nio’s expanding battery-swap and tech infrastructure, the L90 could be a game-changer if Onvo can overcome branding and execution hurdles.
For now, Morgan Stanley’s team sees the low price as a buffer that may help turn investor doubt into fresh demand.
Based in Shanghai, Nio (NIO) is a leading designer and manufacturer of smart electric vehicles (EVs). It offers a range of electric SUVs and sedans, including five and six-seater models, along with innovative power solutions like Power Home, Power Swap, and other charging services.
With a market cap of $9.16 billion, NIO stumbled early in 2025, falling to a low of $3.02 by April. However, stronger deliveries and operational gains have fueled a 32.5% rebound over the past month.
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In terms of valuation, NIO is priced at an enterprise value/sales ratio of 1.21, which is a 9% discount to the sector median of 1.32. This suggests NIO is priced competitively within its sector.
The Onvo L90 is NIO’s newly unveiled three-row electric SUV under its mass-market Onvo sub‑brand. It launched in July 2025 at a starting price of RMB 279,900, including an 85 kWh battery, or RMB 193,900 under its Battery‑as‑a‑Service plan. This aggressive pricing undercuts competitors such as the Li Auto L9 (RMB 409,800) and entry models like the Li L6 and XPeng (XPEV) G9.
Despite its value positioning, the L90 boasts premium features: 900V fast charging, an AR head‑up display, adjustable air suspension, an integrated smart fridge, and Level 2+ autonomous aids powered by Nvidia’s (NVDA) Orin‑X chip. Its spacious cabin rivals those of higher‑priced six‑seaters like the AITO M9 and BYD (BYDDY) Denza N9. NIO aimed to control costs by reusing existing platforms and drivetrains without sacrificing quality.
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Preorders hit 30,000–35,000 within days, and NIO is dispatching early units to dealers for market feedback. A five-seat L80 and 400 new sales outlets are slated for late 2025.
NIO managed a strong delivery performance in June, handing over 24,925 vehicles, its second-highest monthly total on record. That pushed Q2 deliveries to 72,056 units, up about 26% year-over-year. For the first half of 2025, the company delivered 114,150 vehicles, a 31% jump compared to the same period last year.
Financially, the EV company posted Q1 revenue of $1.66 billion, representing a 21% year-over-year increase, but just shy of analyst estimates near $1.73 billion. Vehicle sales remained the primary revenue driver. Despite this miss, margins improved, with vehicle gross margin rising to 10.2% from 9.2% a year ago. Management reiterated its goal of reaching 20% gross margin for the core NIO brand and 15% for Onvo by late 2025, with profitability expected in Q4.
“We continue to invest in multi-brand expansion and cost efficiencies, and Q2 guidance reflects momentum in deliveries,” said CEO William Li on the earnings call.
While free cash flow declined, the company ended the quarter with around $3.5 billion in cash and equivalents, giving it solid financial flexibility heading into the second half of the year. With nine new models planned for 2025 and a target of reaching operating profitability by year-end, NIO appears to be positioning itself for a strong turnaround.
Most Wall Street analysts are not as bullish as Morgan Stanley, with the broader consensus rating on the stock at “Hold.”
In fact, even Hsiao, ahead of his bullish endorsement, wrote: “Although we strongly recognize Onvo L90’s advantages in the crowded race, beating market expectations isn’t without challenges considering Onvo’s unsatisfactory track record of execution and inferior brand awareness, which require extra effort for Onvo to leverage L90 and upcoming L80 to overcome the deficit.”
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NIO shares are currently trading above the average price target of $4.37, implying little to no expected upside over the next year. However, the 16 analysts in coverage have a wide range of targets, ranging as high as $8.10 – a 79.2% premium from Monday’s close – to as low as $3, in line with the April year-to-date bottom.
On the date of publication, Nauman Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
