The Fly

What You Missed This Week in EVs and Clean Energy

Tesla reports quarterly results as Musk faces SEC investigation for role in self-driving claims

Institutional investors and professional traders rely on The Fly to keep up-to-the-second on breaking news in the electric vehicle and clean energy space, as well as which stocks in these sectors that the best analysts on Wall Street are saying to buy and sell.

From the hotly-debated high-flier Tesla (TSLA), Wall Street’s newest darling Rivian (RIVN), traditional-stalwarts turned EV-upstarts GM (GM) and Ford (F) to the numerous SPAC-deal makers that have come public in this red-hot space, The Fly has you covered with "Charged," a weekly recap of the top stories and expert calls in the sector.

QUARTERLY RESULTS: Tesla reported quarterly results on Wednesday, with Q4 EPS coming at $1.19 and revenue at $24.32B, both above consensus of $1.13 and $24.16B, respectively."We are planning to grow production as quickly as possible in alignment with the 50% CAGR target we began guiding to in early 2021. In some years we may grow faster and some we may growth slower, depending on a number of factors. For 2023, we expect to remain ahead of the long-term 50% CAGR with around 1.8M cars for the year. We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. Furthermore, we will manage the business such that we maintain a strong balance sheet during this uncertain period," the company said.

SEC INVESTIGATION: The Securities and Exchange Commission is investigating Elon Musk’s role in Tesla’s self-driving car claims, Lydia Beyoud of Bloomberg reports, citing a person with knowledge of the matter. The review is part of an ongoing SEC probe of Tesla’s statements about its autopilot driver-assistance system, a source told Bloomberg. SEC officials are weighing whether Musk may have inappropriately made forward-looking statements, said the person. Musk and his attorney Alex Spiro didn’t respond to requests for comment.

BUY TESLA: Berenberg upgraded Tesla to Buy from Hold with a price target of $200, down from $255. The company’s price cuts represent an investment in growth, which reflects its cost leadership strategy, the firm says. Berengerg believes Tesla’s new plants offer multi-year opportunity in capital and labor efficiency and thinks that ramping its battery cell production offers further economies of scale. The firm expects Tesla to retain its gross and EBIT-margin lead over legacy car makers, and believes pricing concerns are "misguided."

Click here to check out Tesla’s recent Media Buzz Sentiment as measured by TipRanks.

PRODUCTION INCREASE, PRICE CUTS: Ford announced it is "significantly increasing" production of the Mustang Mach-E this year to help reduce customer wait times and "to take advantage of streamlined costs to reduce prices across the board, making Mustang Mach-E even more accessible to customers and keeping it competitive in the marketplace." Ford stated, "The production increase is a key part of the Ford+ Plan, underscoring the company’s commitment to lead the EV revolution by increasing the value of its EVs for customers, continuing to position Mustang Mach-E as a compelling option for those looking for an electric SUV, and growing market share. Ford already offers EV customers a full-size truck, SUV and van – and has secured the batteries and raw material to scale production of all these models in 2023."

Marin Gjaja, Chief Customer Officer, Ford Model e, said that, "We are not going to cede ground to anyone. We are producing more EVs to reduce customer wait times, offering competitive pricing and working to create an ownership experience that is second to none. Our customers are at the center of everything we do – as we continue to build thrilling and exciting electric vehicles, we will continue to push the boundaries to make EVs more accessible for everybody."

SELL FISKER: Morgan Stanley downgraded Fisker (FSR) to Underweight from Equal Weight with a price target of $4, down from $8. 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.

MOVING TO SIDELINES: JPMorgan downgraded EVgo (EVGO) to Neutral from Overweight with a price target of $6, down from $10. The company’s network throughput growth will likely be dampened as a result of slower site growth, which is due to a variety of reasons, the firm says. JPMorgan notes that EVgo continues to be impacted by permitting delays and other delays in "make-ready" and site improvements, including due to transformer shortages. In addition, as result of higher inflation and input costs, the firm thinks the company’s capital intensity will be higher than previously expected. Overall, JPMorgan views EVgo’s risk/reward is relatively balanced at current share levels.

Meanwhile, BofA downgraded NextEra Energy (NEE) to Neutral from Buy with a price target of $80, down from $94, after a Q4 update the firm called "cautious." The "surprising" retirement of FP&L’s veteran CEO, Eric Silagy, was the "main driver" of the relative share weakness following the update, said the firm, which sees shares being range-bound and lacking further upside with the unexpected turnover and "prospects for a lack of clarity for much of 2023, if not longer."

Piper Sandler also moved to the sidelines on  Enphase Energy (ENPH), downgrading the stock to Neutral from Overweight with a price target of $255, down from $350. The firm says that while it expected a deceleration in California residential growth in 2023, partially due to higher financing costs adversely impacting regions with marginal economics, it did not anticipate this degree of demand weakness. The firm sees most of the U.S. residential market "potentially undergoing an activity reset."

BULLISH ON BROOKFIELD RENEWABLE PARTNERS: JonesResearch initiated coverage of Brookfield Renewable Partners (BEP) with a Buy rating and $37 price target. As a "leading" renewable power company with a majority of its business in clean energy assets, Brookfield Renewable has "abundant growth ahead," the firm tells investors. Brookfield Renewable’s relationship with Brookfield Corp. (BN) is a "major positive" that provides both benefits and growth opportunities, the firm contends.

BEARISH ON SUNPOWER: On Wednesday, Barclays downgraded SunPower (SPWR) to Underweight from Equal Weight with a price target of $18, down from $26. With U.S. residential solar demand expected to slow in 2023, the company will face a changing and challenging environment, the firm tells investors in a research note. The downgrade is part of Barclays’ positioning of residential installers for 2023.

Keywords: charged, ev, electric vehicles, clean energy, solar, batteries, bev

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