One Wall Street analyst sees 12% upside for Nio stock.

After a near-death episode in early 2020, the Chinese electric vehicle (EV) producer Nio (NYSE: NIO) recovered and delivered more than 160,000 EVs last year, making it a true success story.

However, Wall Street is becoming worried due to the decline of China's electric vehicle sector. In the first trading session of the week, analysts at Mizuho Securities lowered their rating on Nio's American depositary shares from "buy" to "neutral," and they projected only a slight increase in price for the stock.

Mizuho downgraded Nio to "neutral" due to falling demand concerns.

The longer-term trend toward EVs is still there in China and elsewhere, according to Mizuho analyst Vijay Rakesh. However, EV makers are facing difficulties this year due to falling demand and tightened liquidity. Sales of electric vehicles are slowing down more quickly than anticipated, according to the bank's staff, which has reduced their growth prediction for 2024 from 25% to 15%.

Along with the downgrade to "neutral," Mizuho slashed its price objective for Nio's U.S.-traded shares to $5.50, implying that the stock has a potential upside of only around 12% in the next twelve months or so.

After a successful 2023, Nio is seeing a completely different 2024. In 2023, Nio's deliveries increased by about 31% compared to 2022, but things have been rather different so far in 2024. Compared to the same period in 2023, the company's delivery of 18,177 vehicles in the first two months of this year was down 12%.

Although Nio's goods are priced more upscalely, they are designed more upscalely, unlike BYD's great lower-cost offers, which have caused other Chinese EV businesses to lose ground recently. It should be somewhat protected from BYD and other cheaper competitors, in theory, because of that.

On the other hand, this could force Nio to lower prices even further in order to maintain sales. Investors ought to exercise caution going forward.

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