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Goldman Sachs analyst Fei Fang downgraded US depositary receipts from Chinese electric vehicle maker NIO to Sell from Hold. ADRs are falling on Friday, but that’s after nearly doubling in the past month.
Photography by Giulia Marchi / Bloomberg
Recovery of a stock of electric vehicles has gone far enough, according to Goldman Sachs. Analyst Fei Fang downgraded US depositary receipts from Chinese electric vehicle maker NIO to sell from Hold. Its target price was stable at $ 7 per ADR.
Fang is doing his best to keep up with the ADR price. “After the 89% share price recovery in the past month, we downgraded NIO [ticker: NIO] sell on valuation, “Fang wrote in a research report on Friday.” The current stock price reflects an excess of optimism since there are no substantial changes in volume / earnings expectations. ”
Its target price implies almost a 50% disadvantage compared to recent levels. However, it is difficult to call it bear. Fang had updated the shares to buy on June 3, just over a month ago.
On June 24, it downgraded the shares to Hold from Buy. Between the two dates, while Fang was rated Buy, NIO shares rose about 51% compared to 1.6% for the S&P 500 and the Dow Jones Industrial Average. EV Leading Tesla Stock (TSLA) rose 13.6% over the same span.
The downgrade to Hold did not stop the NIO ADRs. From June 24 to Thursday’s closing price, NIO ADRs rose an incredible 89%, while Tesla increased another 56%. Electric vehicle stocks have been on fire, increasing the chance of a bubble stocks trading action.
One measure that worries some analysts is retail activity. Tesla and NIO shares, along with other electric vehicle companies, are some of the most popular stocks in Robinhood, the commission-free retail app, for the past month. Popularity is measured by the number of investors adding new positions.
Robinhood’s popularity is a risk for Tesla shares to enter next week’s earnings report according to Credit Suisse analyst Dan Levy. There are many things going well at Telsa, but a “material problem could lead to a correction,” he wrote in an investigative report on Thursday. Like Fang, Levy is a little concerned about EV ratings. It has a $ 1,400 price target for Tesla stock, which is now trading at about $ 1,500 these days.
Overall, Tesla’s shares are approximately 70% higher than the analyst’s average price target of just under $ 900 per share. NIO ADRs are approximately double the average price target of approximately $ 6.
NIO’s ADRs are down 11% on Friday morning to $ 11.52 each.
Thirteen analysts cover NIO ADR, only two buy it. The average purchase rating ratio for stocks in the Dow is 55%.
Write to Al Root at [email protected]
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