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, Wall Street's newest darling Rivian, traditional-stalwarts turned EV-upstarts GM and Ford 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.
SENATE BILL: A group representing General Motors (GM), Toyota Motor (TM), Volkswagen (VWAGY) and other major automakers said a $430 billion bill approved Sunday by the U.S. Senate will put achieving U.S. electric-vehicle adoption targets for 2030 in jeopardy, Reuters' David Shepardson reported. "Unfortunately, the EV tax credit requirements will make most vehicles immediately ineligible for the incentive," said the Alliance for Automotive Innovation's chief executive, John Bozzella, adding the bill "will also jeopardize our collective target of 40%-50% electric vehicle sales by 2030." The group had warned Friday that most EV models would not qualify for a $7,500 tax credit for U.S. buyers under the bill.
IRA ACT: Several renewable energy stocks are in the spotlight on Monday after the Inflation Reduction Act of 2022, or IRA, passed the Senate on Sunday, with Needham analyst Vikram Bagri calling the reconciliation deal “the biggest climate-related win for the current administration” and noting that the bill is “very positive” for his entire renewables coverage. In solar, the analyst views First Solar (FSLR) and Sunrun (RUN) as the biggest beneficiaries in the near-term. Also more bullish on First Solar, both JPMorgan and Guggenheim upgraded the stock to Buy, with the latter citing confidence in the passage of the IRA act.
NEW STOCK SPLIT: Tesla (TSLA) announced that the board of directors has approved and declared a three-for-one split of Tesla's common stock in the form of a stock dividend to make stock ownership more accessible to employees and investors. Each stockholder of record on August 17 will receive a dividend of two additional shares of common stock for each then-held share, to be distributed after close of trading on August 24. Trading will begin on a stock split-adjusted basis on August 25.
REVISED LUCID PRODUCTION VOLUME: During the company's earnings call, Lucid Group (LCID) said that it was revising its 2022 production volume outlook to 6,000-7,000 vehicles. "Our revised production guidance reflects the extraordinary supply chain and logistics challenges we encountered," said Peter Rawlinson, Lucid's CEO and CTO. "We've identified the primary bottlenecks, and we are taking appropriate measures - bringing our logistics operations in-house, adding key hires to the executive team, and restructuring our logistics and manufacturing organization. We continue to see strong demand for our vehicles, with over 37,000 customer reservations, and I remain confident that we shall overcome these near-term challenges."
BORGWARNER EV REVENUE: Based on new business awards and actions announced to date, BorgWarner (BWA) believes it is already on track to achieve approximately $3.7 billion of electric vehicle revenue by 2025. The company now expects its 2022 electric vehicle revenue to grow to approximately $850M, which is more than double what it was in 2021. BorgWarner announced that the company has acquired Rhombus Energy Solutions, a provider of charging solutions in the North American market. The company paid approximately $130 million at closing, and up to $55 million could be paid in the form of contingent payments over the next three years.
BUY LI AUTO: CLSA analyst Aaron Li initiated coverage of Li Auto (LI) with a Buy rating and HK$190 price target. Li's first model, the Li ONE, achieved success in China's family SUV market and he expects its second model launched in the second quarter, the L9, to continue to attract family consumers, Li told investors. Li delivered 11,000 vehicles overall in May, showing strong supply resilience, and he expects the company to deliver about 160,000-450,000 vehicles a year in 2022-2024, the analyst added.
MOVING TO THE SIDELINES ON XPENG: Macquarie analyst Erica Chen downgraded XPeng (XPEV) to Neutral from Outperform with a $25 price target after cutting her fiscal 2022, 2023, and 2024 sales volume and revenue estimates to reflect slower BEV sales growth in the midsize high-tier market. The analyst expects XPeng's market share in China's NEV market to remain at 2.9% for fiscal 2022, and then improve to 3.3% and 3.5% for fiscal 2023 and fiscal 2024, respectively.
Meanwhile, Northland analyst Abhishek Sinha initiated coverage of Plug Power (PLUG)with a Market Perform rating and $25 price target. While Sinha believes Plug has a strong balance sheet to support its envisioned growth, the "hydrogen market is fraught with uncertainties" and execution risks in the company's "lofty growth plans are high," the analyst told investors. Given "poor" visibility on free cash flow and limited upside to the valuation, Sinha thinks "investors could find other opportunities more attractive" where the risk/reward proposition is "more compelling."
FISKER RISK OF RAISING NEW CAPITAL: Morgan Stanley analyst Adam Jonas downgraded Fisker (FSR) to Equal Weight from Overweight with a price target of $10, down from $15. The company's second quarter results "were largely in line" but Fisker needs "substantial new liquidity" within six months to execute the Ocean ramp plan, Jonas told investors in a research note. The analyst believes the need for outside capital in challenged capital markets is "deterministic and compounds execution risk." Continuing macro and geopolitical risk, compounded by European gas shortage risk - as 100% of Fisker's production is in Austria, elevates its near term execution risk, Jonas contended. He now assumes the company raises $1B in the fourth quarter at the current share price of $10, compared to a $1.5B debt raise in fiscal 2023 that he modeled previously.
BUY WALLBOX: Barclays analyst Christine Cho initiated coverage of Wallbox (WBX) with an Overweight rating and $14 price target. EV adoption is expected to accelerate and home chargers are expected to be the largest part of the market at over 80%, Cho said. Wallbox focuses on home chargers and is expanding into deploying DC fast chargers for commercial/public use, the analyst noted. Cho also started coverage of Volta (VLTA) with an Equal Weight rating and $2 price target.
SOLAR INITIATIONS: Barclays analyst Christine Cho initiated coverage of the North America clean technology space with a Positive view. Within residential solar, Cho sees installers Sunnova Energy (NOVA) and Sunrun as best positioned. She also prefers Array Technologies (ARRY) for its exposure to ground-mount solar given its valuation and improvement in margins. The case for solar is "as attractive as it's even been and this secular growth trend will continue," Cho told investors in a research note. She believes the Inflation Reduction Act of 2022 "provides tailwinds after several setbacks" for the sector.
The analyst initiated coverage of
- Sunnova Energy with an Overweight rating and $35 price target;
- Sunrun with an Overweight rating and $46 price target;
- Array Technologies with an Overweight rating and $20 price target;
- SolarEdge Technologies (SEDG) with an Equal Weight rating and $389 price target;
- Enphase Energy (ENPH) with an Equal Weight rating and $292 price target;
- SunPower (SPWR) with an Equal Weight rating and $26 price target;
- First Solar with an Underweight rating and $89 price target.
Meanwhile, Northland analyst Donovan Schafer initiated coverage of Maxeon Solar (MAXN) with an Outperform rating and $22 price target. The analyst views Maxeon as "an attractive way to play the tailwinds" he expects from Manchin's proposed climate bill and increased EU solar demand due to ongoing energy security concerns. Maxeon will likely add U.S. capacity if the bill passes and he sees multiple factors driving higher average selling prices and improving gross margins near-term, Schafer told investors.
