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Niu Technologies (NASDAQ:NIU) stock ticked lower on Tuesday after Bank of America stepped to the sidelines on the name.
The bank’s analysts indicated that a “weaker sales outlook” and the niche market it caters to constrain upside. Additionally, the company is not without serious competition in the domestic Chinese market.
“Niu’s focus on premium ePTWs (electric passenger two wheelers) is struggling from consumption downgrades and high battery prices reducing the attraction of lithium ePTWs. We see these pressures persisting – particularly in the domestic market, where competition is also intensifying as mass-market leaders Yadea and Aima gradually premiumize,” the bank’s analysts stated. “Although we see a return to profit from 2023E, from reopening and industry growth, we think the 100%+ rebound in the stock price since October reflects most of this benefit.”
Alongside the downgrade to Neutral from Buy, the team trimmed their price target to $5.90 from a prior $11.40. Shares of the Chinese mobility company slipped 2.66% after Tuesday’s market open, taking year to date declines into the double-digits and taking the steam out of a rapid run from October 2022 lows.
“We remain positive on the longer term outlook, but cost pressures are seen keeping near-term earnings depressed,” the team concluded. “We see near-term headwinds from weak 2022 earnings and resultant broker forecast downgrades but see a gradual easing in cost pressures and a return to profitability from China’s reopening helping to support the stock.”
Read more on the most recent sales data for the company.
