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

Several electric vehicle makers are expected to report quarterly results over the upcoming weeks. Both Rivian (RIVN) and Lucid (LCID) are scheduled to report quarterly results on February 21st, while Nikola (NKLA) is expected to report earnings on February 22nd. Meanwhile, Li Auto (LI) will hold its earnings call on February 26th, with Fisker (FSR), Xpeng (XPEV), and Nio (NIO) expected to announce results soon. What to watch for:

DEEP PRICE CUT: Deutsche Bank lowered the firm’s price target on Rivian Automotive to $16 from $19, while keeping a Hold rating on the shares. The company recently expanded its R1T and R1S configuration options to allow the cheapest Standard battery pack selection and introduced a new pack called “Standard+,” the firm tells investors in a research note. Deutsche believes the move is a “deep price cut without much improvement in cost, which could hurt the company’s financials.” It likely signals weakening of demand for R1, which reflects a broader slowdown in electric vehicle adoption, but could have significant consequences for Rivian, contends the firm. Deutsche worries the new cheaper configurations could deepen R1 losses and push out Rivian’s path and timeline to breakeven, lead to larger free cash flow burn, prompt the need for additional capital, and potentially even raise questions around future R2 profitability. It says the new Standard “packs as a clear negative signal.”

DEMAND PRESSURE: Earlier this month, Barclays downgraded Rivian Automotive to Equal Weight from Overweight with a price target of $16, down from $25. The company has a great product and technology, but this is not enough to avoid increased signs of demand pressure amid the broader electric vehicle slowdown, the firm tells investors in a research note. Barclays believes demand softness implies risk from pricing, slower volume growth, and a longer path to breakeven for Rivian. The company also has an ongoing need for capital raises, adds the firm.

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UNLIKELY TO BRING NEW NEGATIVE INFO: Morgan Stanley says it is difficult to see how Lucid Group’s Q4 report introduces new negative information that a bearish consensus doesn’t already expect. While an environment of excess supply relative to demand for electric vehicle poses a challenge to Lucid’s core business model, it is possible that the company’s strategic value as an electric vehicle partner may be rising, the firm tells investors in a research note. Morgan Stanley believes competing auto firms who are under greater pressure to pursue electric vehicle strategies in a more capital disciplined way could find value in partnership with players like Lucid. The firm keeps an Underweight rating on the shares with a $4 price target but says that while it “wanted to stay ahead of the emergence of a potentially bullish thesis to the Lucid story,” the company has yet to prove it can sell its vehicles for a price that exceeds variable cost of production.

BUY NIKOLA: Late last month, Baird initiated coverage of Nikola with an Outperform rating and $2 price target. The firm sees “significant potential” in the market for zero-emissions trucking and believes Nikola “has finally found the right management team to capitalize on the opportunity.” The company’s proprietary design and software are key differentiators versus traditional diesel trucks, says Baird, which sees potential catalysts ahead for both the truck and energy businesses in the form of manufacturing improvements, customer and partnership announcements, and hydrogen infrastructure buildout.

COMPELLING SETUP: Deutsche Bank upgraded Li Auto to Buy from Hold on February 6th, with a price target of $41, down from $45. Following the stock’s 32% decline since late November, the firm said it saw a “compelling set-up in the coming quarters driven by a robust product pipeline,” further supported by an attractive valuation for a “top tier” electric vehicle player. The management team has proven to be best-in-class, Deutsche added. While Q1 will be soft, Li’s volume and margin should bounce back starting in Q2, boosted by new/refreshed models, says the firm.

SALES MAY UNDERSHOOT: Earlier this month, Citi lowered the firm’s price target on XPeng to $7.30 from $10.10, while keeping a Sell rating on the shares. Due to volume “likely undershooting” in the March quarter, potential lukewarm X9 orders, and an “unsustainable volume-pushing strategy” from Q2, the firm cut Xpeng’s 2024 and 2025 volume estimates. Amid weak sales momentum and low season impact, Xpeng’s March quarter sales may undershoot the January level, which means Q1 volume would only be close to the December 2023 level “with huge downside risk on volume and margin,” says Citi.

LOWER SALES GROWTH: Back in January, BofA downgraded Nio to Neutral from Buy with a $9 price target. Nio does not have new models due in Q1-Q3 of 2024, so its sales growth volume could be lower, the firm notes. Nio and most EV peers may need to provide discounts on existing models and may spend more on marketing and sales networks to facilitate the launch of its second and third brands, leading to a higher operating expense than the firm had previously expected, BofA contends.