Is it time to buy Nio shares as Goldman Sachs calls 60% upside?

On Thursday, Nio Inc. (NYSE:NIO) shares spiked 7% after Goldman Sachs (NYSE:GS) analysts upgraded the stock to buy from neutral. The firm also issued a price target of $56, implying an upside potential of more than 60%.

The analyst thinks the EV maker’s ET7 model is well-positioned to challenge the Mercedes S-class and the BMW 7 series. Goldman also thinks the stock could rise significantly ahead of the NIO day event in December.

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Nio announced its most recent quarterly results last Friday, beating analyst expectations on earnings by 100%. The company delivered record monthly EV sales in September, with 10,628 vehicles shipped implying a Y/Y growth of more than 125%, and 80.7% more than it sold in August.

Time to bet on growth?

From an investment perspective, Nio shares trade at a steep P/S ratio of 12.97, making the stock less attractive to value investors. However, with EV sales growing month after month, analysts are becoming more optimistic about the Shanghai-based automaker’s stock.

As a result, they expect Nio’s EPS to grow by more than 57% this year, before rising by a further 83.60% next year. Therefore, growth investors could look to add the stock to their portfolio ahead of this year’s Nio event.

There is more room to run

Technically, Nio shares appear to have recently spiked, bouncing off the trendline support. However, the stock is yet to reach the overbought conditions of the 14-day RSI and has more room to run before retesting the trendline resistance.

Therefore, investors could target extended gains at approximately $39.59, or higher at $43.61, while $32.61 and $28.42 are crucial support zones.

It’s not too late to buy NIO stock

In summary, although NIO shares spike 7% on Thursday, the stock is still down more than 32% this year, leaving more room for recovery. 

Therefore, with the stock increasingly receiving positive chatter from Street analysts ahead of the Nio event in December, the current rebound could continue into the foreseeable future.

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