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.
SHARE CATALYST: Barclays expects a "modest" delivery beat in Q1 for Tesla, with production modestly outpacing deliveries. It expects Q1 deliveries of 425,000 units, modestly ahead of the 420,000 consensus. Concerns have built on the pace of deliveries amid weakening demand signals, but commentary on the pace of production "likely implies some upside, the firm tells investors in a research note. Barclays believes a beat could be a catalyst for the stock, as expectations have come down amid signs of softening demand. The firm further thinks additional price cuts are likely, but says Tesla can better afford cuts over other car makers. It keeps an Overweight rating on Tesla shares with a $275 price target.
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AUTO GROSS MARGIN GOAL: Morgan Stanley’s China battery team notes that domestic EV battery inventory continued to rise to 152GWh at end of February. While Chinese light vehicles are not on sale in the U.S. market, the firm believes excesses throughout the battery supply chain could find a way to ex-China markets over time, driving competitive actions, and is "prepared for more EV price cuts" in EU and U.S. While Morgan Stanley thinks Tesla should be able to achieve its goal of a minimum 20% auto gross margin in Q1 2023, this may prove difficult to defend in subsequent quarters in the event of continued downward price competition and slowing economic growth following recent events in the global banking sector and knock-on impacts on the consumer. The firm has an Overweight rating on Tesla with a price target of $220 on the shares.
Meanwhile, Citi raised the firm’s price target on Tesla to $192 from $146, while keeping a Neutral rating on the shares and noting that the company’s Q1 auto gross margins will give investors a first look at the impact of Tesla’s Q1 price cuts. Citi does not have conviction around a beat, so it currently sees a neutral Q1 setup for the shares. That said, recent data points have looked more encouraging, including China registration and a "mindshare" analysis. The firm believes Tesla’s competitive lead could widen further in a hard landing economic scenario, "at least to some extent."
UPSIDE CATALYST WATCH: Citi opened a "90-day upside Catalyst Watch" on shares of Fisker (FSR). Despite issuing "very encouraging" 2023 guidance versus electric vehicle peers, Fisker shares have languished likely on macro concerns, the firm tells investors in a research note. If Fisker delivers on all or most of its near-term milestones, the stock’s narrative "can rapidly change from one of heavy skepticism today to one that embraces the Ocean’s compelling EV specs/price-points, the asset-light model and the company’s growth objectives," Citi contends. With a market capitalization that is a "fraction of peers," the upside case appears sizable if Fisker can deliver in the coming months, writes the firm. It keeps a Buy rating on the shares with a $21 price target.
MOVING TO THE SIDELINES: Bernstein downgraded XPeng (XPEV) to Market Perform from Outperform with a price target of $12, down from $16. XPeng will continue to face pressure from increasing competition, and sales momentum could pick up come Q3, risks remain and it remains unclear whether G6 will be a blockbuster following the lackluster performance of P5 and G9 launches, the firm tells investors in a research note.
BUY LION ELECTRIC: R.F. Lafferty initiated coverage of Lion Electric (LEV) with a Buy rating and $7 price target. Lion is "a North American leader in zero-emission transportation" with over ten years of experience in electric vehicle research and development, said the firm. In the school bus segment, the company’s total addressable market is roughly $10B with an estimated unit delivery per year of 45,000 buses, while Lion estimates its total addressable market for medium and heavy-duty urban trucks is approximately 335,000 trucks, or $100B annually, R.F. Lafferty tells investors.
LIMITED MARGIN IMPROVEMENT: Goldman Sachs reinstated coverage of ChargePoint (CHPT) with a Neutral rating and $10 price target. The company is well positioned for growth as a full solution provider of chargers/software/services, and as the market share leader in the U.S. AC charging space, where it should benefit from its network/early-mover position especially with existing enterprise customers. The firm warns however that the margin of improvement for ChargePoint will be somewhat limited by industry mix shift toward DC fast charging and competition.
UPGRADE ON RECENT PULLBACK: Susquehanna upgraded Enphase Energy (ENPH) to Positive from Neutral with a $275 price target. The setup for Enphase has become much more attractive since Susquehanna downgraded the stock to Neutral in mid-December, the firm tells investors in a research note. Following an almost 40% decline in share price since early December, the stock’s valuation has become more rational, especially when considering Enphase’s longer-term growth potential, Susquehanna adds. It thinks the impact of U.S. installation mix shifting "from long-tail to Tier 1" for Enphase is likely to be "muted" near-term. Meanwhile, Susquehanna expects continued strong growth in Europe, which it says could offset some of the near-term weakness in the U.S.
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