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Here’s What Wall Street Experts Are Saying About These EV Names Ahead of Results

Posted May 7, 2024 at 10:00 am
Jessica de Sa-Mota
The Fly

UBS upgrades Rivian Automotive to Neutral from Sell as layoffs continue

Several electric vehicle makers are expected to report quarterly results over the upcoming weeks. Lucid (LCID) is scheduled to report quarterly results on May 6th, while both Rivian (RIVN) and Nikola (NKLA) are expected to report earnings on May 7th. Li Auto (LI), Xpeng (XPEV), and Nio (NIO) are also expected to announce results soon. What to watch for:

LAY OFFS: Last month, Reuters’ Abhirup Roy and Akash Sriram reported that Rivian will lay off about 1% of its total headcount, the second major round of job cuts this year as the company aims to cut costs amid a broader EV demand slowdown. “This was a difficult decision, but a necessary one to support our goal to be gross margin positive by the end of the year,” the company told Reuters in an email.

MORE BALANCED RISK REWARD: UBS upgraded Rivian Automotive. The near-term risk-reward on the stock has become more balanced at current levels as shares now price in about $4.5B in 2025 sales vs. consensus that stands still at $7.5B, the firm told investors in a research note on April 15. Short interest on the stock has also climbed to about 19% of free float, positioning the name better if a positive data point or a catalyst emerges, even though shares are likely to remain volatile, UBS added. The firm further noted “solid” demand for Rivian vehicles despite the slowing EV market as one of the factors behind its bull thesis, though a reluctance by investors to buy shares ahead of a likely capital raise underpins the bear case.

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

ON THE SIDELINES: Citi resumed coverage of Lucid Group. The firm sees a balanced risk/reward when weighing Lucid’s “strong” electric vehicle technology position and “adequate” near-term liquidity against past demand and branding challenges and the company’s reliance on a successful Gravity ramp later this year. Having spent some time reviewing Gravity, Citi came away encouraged by the vehicle and sees good prospects for success. Still, a fair amount of execution risk exists to launch Gravity on time, says the firm.

Last month, Wolfe Research initiated coverage of Nikola with a Peer Perform rating and no price target. While noting that Nikola has a first mover advantage in commercializing hydrogen fuel cell electric vehicles, the firm expects continued EBITDA losses and cash burn for “the next couple of years.” However, Wolfe adds that Nikola “finally has a stable management team in place” with a well-respected CEO and recently appointed CFO following “years of controversy and management turnover.”

Meanwhile, Macquarie resumed coverage of Nio. While stating that near-term volumes are challenging, the firm notes that Nio has reached a point where heavy upfront spending on battery swapping and service centers provide an edge.

Macquarie also resumed coverage of XPeng. While its mass-market launches will help, scale remains the biggest challenge for XPeng and the firm is concerned that heavy competition in its core BEV price segments make it difficult to grab share.

DELIVERIES: XPeng announced its vehicle delivery results for April, saying it delivered 9,393 Smart EVs, representing a 33% increase year-on-year, up 4% over the prior month. The XPeng X9 achieved monthly deliveries of 1,959 units in April, with cumulative deliveries nearing 10,000 units since its launch, maintaining its position as the all-electric MPV in China. Year-to-date, XPeng has delivered 31,214 Smart EVs, a 23% increase year-on-year. In April, the monthly active user penetration rate of XNGP in urban driving scenarios reached 82%.

Meanwhile, Nio said it delivered 15,620 vehicles in April, representing a strong increase of 134.6% year-over-year. The deliveries consisted of 8,817 premium smart electric SUVs, and 6,803 premium smart electric sedans. Cumulative deliveries of Nio vehicles reached 495,267 as of April 30. On April 25, Nio launched its 2024 ET7, a smart electric executive sedan. Deliveries of the 2024 ET7 began on April 30. On April 25, Nio entered into a strategic cooperation with Lotus Technology, a global luxury electric vehicle maker, on charging and swapping.

Li Auto also announced that the company delivered 25,787 vehicles in April, up 0.4% year over year. The cumulative deliveries of Li Auto vehicles reached 739,551 as of the end of April. As of April 30, the company had 481 retail stores in 144 cities, as well as 361 servicing centers and Li Auto-authorized body and paint shops operating in 210 cities. 386 super charging stations have commenced operation across the country, equipped with 1,678 charging stalls.

HEIGHTENED COMPETITION: Late last month, Barclays downgraded Li Auto. The firm says the “fundamental issue here is competition” from Huawei and BYD (BYDDF). Industry sales data show that sales of Li’s L series have been soft in recent weeks, as the company cut prices across its entire L series of SUVs and the Mega model for the first time in its history, Barclays tells investors in a research note. The firm notes this follows disappointing initial sales of the Mega model, which was “the first operational misstep” from the management.

More bearish, Lastly, Macquarie resumed coverage of Li Auto. Li Auto “now stands alone” among China’s new wave of EV entrants with the highest volumes, vehicle margins and cash generation among peers, said the firm.

Originally Posted May 6, 2024 – Here’s what Wall Street experts are saying about these EV names ahead of results

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