Nomura has moved Nio Inc. up to a Buy rating from Neutral, pointing to improving operating results and ongoing growth in vehicle deliveries as signs the Chinese electric vehicle manufacturer may be entering a healthier phase of its business cycle.
The brokerage set a new price target of $6.60, down from its previous $8.40 target, noting that the revised target still implies about 34% upside from the current share price of $4.94.
In its assessment, Nomura highlighted that Nio's operations have shown improvement over the past two quarters. Higher deliveries combined with tighter cost control have supported profitability, according to the firm. While Nomura trimmed its shipment forecasts for 2026 and 2027 to reflect what it characterized as a tougher market environment, it nevertheless anticipates a return to stronger growth thereafter.
Specifically, Nomura now models vehicle deliveries growing at a compound annual growth rate near 25% between 2025 and 2028, and expects revenue to expand at roughly a 21% annualized pace over the same period. Alongside these top-line assumptions, the brokerage raised its profitability forecasts: it increased projected gross margins for 2026 and 2027 and lifted operating margin estimates by more than three percentage points for each of those years.
Nomura's revisions lead it to expect that Nio will achieve non-GAAP operating profit breakeven in 2026. That outlook follows what the firm described as stronger fourth-quarter performance for the automaker. In that quarter, Nio reported revenue that was 76% higher than a year earlier and 59% higher than the prior quarter. Vehicle gross margin improved by 5 percentage points year over year and by 3.4 percentage points sequentially.
The brokerage noted that improved operating efficiency and reduced expenses helped Nio record positive operating profit and net income for the first time. Those results, combined with continued delivery momentum, underpin Nomura's more constructive stance on the stock.
Nomura also flagged product cadence as a potential source of incremental demand. Nio plans to launch three new mid- to large-size sport utility vehicles, and two of those models are expected in the second quarter of 2026. The brokerage said the new models could aid order growth and help sustain margins, provided the company continues to manage costs tightly.
While Nomura trimmed shipment forecasts for the near-term years 2026 and 2027 to reflect market challenges, its revised medium-term assumptions and upgraded margin outlook form the basis for the Buy rating and the $6.60 price target.
Bottom line: Nomura's upgrade reflects a combination of improved recent results, better cost control, and confidence in product-driven demand growth, even as the firm moderates near-term shipment expectations.