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Strength Seen in NIO (NIO): Can Its 10.8% Jump Turn into More Strength?

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NIO Inc. (NIO - Free Report) shares soared 10.8% in the last trading session to close at $5.01. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 31.8% gain over the past four weeks.

NIO stock surged after the company announced the L90’s official launch date. The model is set to launch on July 31, with deliveries starting on Aug. 1. Earlier this month, Morgan Stanley reaffirmed its “Buy” rating on NIO, highlighting the ONVO L90 launch as a key catalyst. The L90 is set to be one of the fastest-to-market models in NIO’s lineup. 

This company is expected to post quarterly loss of $0.30 per share in its upcoming report, which represents a year-over-year change of +11.8%. Revenues are expected to be $2.76 billion, up 14.8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For NIO, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on NIO going forward to see if this recent jump can turn into more strength down the road.

 

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

NIO belongs to the Zacks Automotive - Foreign industry. Another stock from the same industry, Honda Motor (HMC - Free Report) , closed the last trading session 0.3% higher at $30.41. Over the past month, HMC has returned 5.6%.

For Honda, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.51. This represents a change of -67.5% from what the company reported a year ago. Honda currently has a Zacks Rank of #4 (Sell).


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