Here’s what Wall Street experts are saying about these EV names ahead of results

Morgan Stanley believes EVs are passing from acute under-supply to potential over-supply

Several electric vehicle makers are expected to report quarterly results in the upcoming weeks. Lucid (LCID) is scheduled to report earnings on Wednesday, February 22, while Nikola (NKLA) is expected to announced quarterly results the day after. Fisker (FSR) and Li Auto (LI) will hold their earnings calls on February 27, Rivian (RVN) on February 28, Nio (NIO) on March 1, and Xpeng (XPEV) on March 17. Lastly, Lordstown Motor (RIDE) is also expected to announced results soon. What to watch for:

MIXED CYCLE VIEW: Last week, Barclays initiated coverage of the U.S. autos and mobility sector with a Neutral view. The firm has a "mixed cycle view," saying recession pressures are offset by a positive trajectory for vehicle production and potential for pricing and inventory to settle at a "healthy and profitable new normal." Megatrends are positive for the industry longer term, but "not without challenges along the way," Barclays tells investors in a research note.

The firm started six stocks with Overweight ratings: Adient (ADNT), Aptiv (APTV), BorgWarner (BWA), Mobileye (MBLY), Rivian Automotive and Tesla (TSLA). Barclays expects electric vehicle penetration to reach 48% by 2030. Tesla stands out with near-term financial strength and its lead in electric vehicle and software, the firm contends. Barclays views Mobileye as the best pure-play on drive assistance systems. It also believes Rivian is positioned to take "solid share" in the North American EV market. The firm put Underweight ratings on two stocks — Fisker and Visteon (VC). Barclays rounded out its coverage with Equal Weight ratings on nine stocks: American Axle (AXL), Autoliv (ALV), Dana (DAN), Ford (F), General Motors (GM), Lear (LEA), Lion Electric (LEV), Magna (MGA) and Polestar (PSNY).

BUY LUCID: Back in January, Citi resumed coverage of Lucid Group with a Buy rating and $12 price target. The firm said that despite recent and ongoing headwinds, it is encouraged by Lucid’s latest Q4 production update and balance sheet actions. Citi continues to like the company’s technology and product positioning in the electric vehicle race, and while it expects continued share volatility, the firm likes the stock’s risk/reward given the continued production ramp of the Air.

‘SHAKE-OUT’ PHASE: Last month, Morgan Stanley lowered the firm’s price target on Lucid Group to $5 from $10 and on Rivian to $28 from $55, while keeping an Underweight rating on the former and an Overweight on the latter. Electric vehicles, or EVs, are passing from acute under-supply to potential over-supply and Tesla’s recent price cuts "are just the latest sign the EV market may be entering the ‘shake-out’ phase," the firm tells investors. Morgan Stanley argues that shorter delivery times, price cuts, and falling used values "mark a new ‘reset’ chapter for EVs," which prompts them to recommend reducing exposure across the EV portfolio. As the leader in global EVs, Tesla’s aggressive posture on price "applies significant fundamental pressure on its peers," said the firm, which questions whether competitors can keep up.

The firm also downgraded Fisker to Underweight from Equal Weight with a price target of $4, down from $8, voicing similar concerns.

BULLISH ON LI AUTO: Two weeks ago, Citi raised the firm’s price target on Li Auto to $51.50 from $48 and kept a Buy rating on the shares. After recent new product launches, the firm revised up its 2023 sales forecast from 210,000 to 235,000 units. Citi said it was also "impressed" by the pricing strategy of Li Auto.

Meanwhile, HSBC lowered the firm’s price target on Li Auto to $35 from $42 but maintained a Buy rating on the shares. The company reported "solid" sales in January despite low seasonality and COVID-related disruption, the firm notes. HSBC believes Li’s new model could boost volumes, but factors in potential cannibalization and tougher competition into its estimates. The firm attributes the stock price correction to demand concerns and higher competition.

MOVING TO THE SIDELINES: Last month, JPMorgan downgraded XPeng to Neutral from Overweight with a price target of $9, down from $11. The reopening trade in autos is "playing out rapidly and could run out of steam in near-term," the firm says. The market appears to be rapidly pricing in a 2023 recovery scenario as economic momentum resumes, but the recent rally "has priced in a rosy scenario while corporate earnings and underlying industry data are still lagging," JPMorgan notes. The firm cites valuation and potential for estimate cuts for the downgrade of XPeng.

Keywords: earnings watch, earnings, quarterly results, EV, electric vehicles