What You Missed This Week in EVs and Clean Energy

Both Wolfe Research and Berenberg move to the sidelines on Tesla

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.

MACRO CHALLENGES: Wolfe Research downgraded Tesla to Peer Perform from Outperform without a price target. The analyst has become "incrementally more concerned about macro challenges." Tesla has already had to cut car prices quite a bit more than expected, and macro challenges are intensifying in ways that could disproportionately affect U.S. electric vehicle makers, the analyst tells investors in a research note. Autos are durable goods, and their purchases are deferred when consumers feel less financially secure, says the firm. In addition, Tesla shares are currently trading within 6% of Wolfe’s prior price target of $185.

Berenberg also downgraded Tesla to Hold from Buy with a price target of $210, up from $200. Tesla’s new plants offer multi-year opportunity in capital and labor efficiency, but "misplaced fears of a price war" appear to have been accepted by the market, Berenberg tells investors in a research note. The firm now sees less upside in the shares after the 21% rise since its upgrade. Moving into a smaller vehicle segment would open up a significant volume opportunity for Tesla, but this is likely to take time, Berenberg adds. It says Tesla’s valuation "now leaves less room for disappointment."

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

EXECUTION RISK, COMPETITION: Morgan Stanley initiated coverage of Nikola (NKLA) with an Equal Weight rating and $3 price target. The firm says "tangible evidence of a maturing manufacturing footprint" and comprehensive approach to zero emissions vehicle infrastructure ensures that Nikola will participate in the transition towards a zero-emission vehicle world. However, execution risk and competition from incumbents and start-ups "remains elevated" for the company, Morgan Stanley argues.

BUY RIVIAN: BofA resumed coverage of Rivian Automotive with a Buy rating and price target of $40, down from $50. The company’s Q4 results "were just ok" and its 2023 volume outlook of 50,000 was lighter than expected, BofA tells investors in a research note. The firm reduced estimates to reflect the report as well as the company’s earlier than expected capital raise. The raise was largely expected as Rivian’s cash burn remained elevated in 2022, but comes sooner than forecast, BofA says. However, the firm still believes Rivian is one of the most viable among the start-up electric vehicle automakers and a relative competitive threat to incumbent car makers.

NEAR-TERM UNCERTAINTY: Citi initiated coverage of SunPower (SPWR) with a Neutral rating and $16.50 price target. The firm expects the solar sector to see "continued unprecedented growth" but sees near-term uncertainty for the U.S. residential solar sector. The firm prefers geographically diversified names with European exposure, as well as utility and commercial scale versus residential exposure. Its top picks are Enphase Energy (ENPH), Eneti (NETI), SolarEdge Technologies (SEDG) and Shoals Technologies (SHLS). Citi’s least preferred names are Generac (GNRC) and SunPower (SPWR).

The firm also started coverage of Sunrun (RUN) and Array Technologies (ARRY) with Neutral ratings and price targets of $27 and $24, respectively.

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