Electric-vehicle makers and suppliers are proliferating, boosting the number of companies for Wall Street automotive analysts to cover at a pace unseen for the sector in decades. It isn’t easy to value companies without sales, but some start-ups are picking up Buy ratings as analysts pick potential winners and losers.
Friday, Morgan Stanley analyst Adam Jonas dove deeper into the EV debate, adding four EV-related stocks to his coverage. He launched coverage of QuantumScape (ticker: QS) and Fisker (FSR) shares with Buy ratings and targets for the stock prices well above the current levels. His call on Quantum, which closed Thursday at about $45, is $70 a share. His price target for Fisker is $27, not too far from double the closing price of $15 a share.
QuantumScape is pioneering lithium-anode solid-state rechargeable battery technology. Sales are years away, but its products promise better range and safety, as well as lower charge times and costs. Jonas likes the company’s potential as well as its partnership with Volkswagen (VOW. Germany), a large shareholder.
Fisker is building a luxury SUV and Jonas likes the company’s decision to use Magna International (MGA) to manufacture the car, reasoning it means less risk and less capital tied up in manufacturing.
Jonas isn’t bullish on all the new start ups. He rates shares of Lordstown Motors (RIDE) and Romeo Power (RMO) at Sell. His Lordstown price target is $18, while shares closed Thursday at about $31. His call on Romeo is $12, but that stock ended Thursday at almost $18.
Lordstown is launching an electric pickup truck. There are too many of those coming for Jonas’s taste. Rivian, Tesla (TSLA), Ford Motor (F), and General Motors (GM) will all eventually be offering E-trucks.
Romeo is a battery-technology supplier and will also face rising competition, according to Jonas.
Jonas has done a 180-degree turn on EV stock valuations recently. He rated Tesla shares Sell as recently as August, with a price target of $210 a share. He upgraded the stock to Hold in August, and then to Buy in November. Since moving to Buy, Jonas has raised his Tesla price target from $540 to $880 a share.
Tesla’s profitability was a factor, as was Jonas’s thinking about Tesla’s nonautomotive business opportunities. He believes the Tesla car business is worth about $345 a share. Tesla’s software sales, future mobility business, stationary power, and even eventual battery sales make up the rest of his Tesla valuation.
EV producers aren’t the only recipients of Buy ratings from Jonas. He rates GM shares Buy and has an $80 price target for that stock. Jonas believes GM can successfully navigate the transition from gasoline to battery power. GM is planning to spend about $27 billion on EV and autonomous vehicle technology between now and 2025. The company will launch 30 EV models globally between now and then.
Other analysts are also starting to pick up coverage of the new EV players. Quantum has three analysts covering it, according to Bloomberg. One rates shares at Sell, and one Hold. Jonas completes the spectrum with his Buy call.
Six analysts cover Fisker stock now, with three Buys, two Holds, and one Sell rating. Lordstown, too, has six analysts, with three Buy calls, one Hold, and two Sells.
Four analysts cover Romeo. Jonas is the only Sell. The other three rate shares at Buy.
It’s still early for the EV stocks, from a Wall Street ratings perspective. The average stock in the Dow Jones Industrial Average has about 30 analysts and the average Buy-rating ratio is about 57%.
All four stocks are moving Friday on the new ratings. Quantum and Fisker shares were up about 11% and 16% in premarket trading, respectively. Lordstown and Romeo shares were down about 5% and 3%, respectively.
Futures on the S&P 500 were down about 0.2%.
Write to Al Root at [email protected]
