UBS has published a research report marking its initial coverage of NIO-SW (09866) on the Hong Kong Stock Exchange, assigning a "Buy" rating with a target price of HK$43. The firm projects NIO's revenue to reach RMB 131.663 billion by 2026, with expectations that the company will achieve profitability in 2027, recording a net profit of RMB 1.684 billion. At current levels, NIO's shares trade at just 0.5 times and 0.4 times price-to-sales (P/S) ratios for 2026 and 2027, respectively.

Despite intense competition in China's domestic automotive market, UBS notes that rising consumer purchasing power has kept the premium pure electric vehicle segment remarkably resilient. This year, NIO has leveraged its brand loyalty and high-end positioning to become one of the few marques achieving both year-over-year sales growth exceeding 50% and an increase in average selling price, all while maintaining monthly deliveries above 10,000 units for vehicles six months after their launch.

The bank believes that a refresh of its product portfolio will serve as a core growth engine for NIO going forward. The company plans to upgrade its ES6 and ET5 models, which currently rely on older 400V architecture, by 2027. Combined with the commercial success of its flagship ES8 and ES9 vehicles and the network benefits from nearly 5,000 battery swap stations, UBS expects these model refreshes to significantly bolster revenue growth and margin improvement in 2027.