By Davit Kirakosyan
Needham & Company has a new EV analyst who took over coverage of Tesla (NASDAQ:TSLA) and upgraded the shares to Hold from Underperform and launched coverage on three other EV stocks – Fisker (Buy), Rivian (Hold), and Lucid (Underperform).
Tesla was upgraded to hold from underperform. The analyst mentioned the following potential catalysts that could drive the stock higher: (1) renewed federal tax credit eligibility under the Inflation Reduction Act, (2) potential credit rating upgrade to IG by YE, (3) the first deliveries of the Cybertruck in 2023, (4) expansion of the charging network and improved utilization, and (5) gross margin improvement driven by 4680 cells.
The analyst initiated coverage on Fisker Inc (NYSE:FSR) with a buy rating and a $12 price target, noting that the company is entering the EV market with SUVs that feature cutting-edge technology at an affordable price (starting price below $40,000 for the Fisker Ocean), which opens a vast opportunity set for the company. According to the analyst, the company's business model and skateboard design should allow it to launch more models sooner and gain market share. Despite these positive attributes, the stock trades at a discount to its peers.
Rivian Automotive Inc (NASDAQ:RIVN) was initiated at a hold rating. While the company is in a solid position, the analyst believes the competition will get intense, profitability is still far out, manufacturing challenges remain, and the company will require additional capital in 2024 and beyond.
Lucid Group Inc (NASDAQ:LCID) was initiated at underperform rating. While the Lucid Air is the epitome of luxury in EV sedans and is attractively priced relative to its competition, the analyst said that profitability is far out in the future, production has been slow to ramp, several key company officers have left recently, software in the vehicles needs work, and he believes it will need more capital by Q1/23. According to the analyst, the recent high-profile departures could mean more delays in ramping delivery.