UBS initiates coverage of Tesla with a Neutral rating as it prefers to await a better entry point with 2024 seen as a below trend growth year
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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.
ON THE SIDELINES:
UBS initiated coverage of Tesla with a Neutral rating as part of a broader research note on U.S. Autos, Auto Parts, and Auto-Tech names. The group at large has sold off owing in part to uncertainty around the UAW-D3 labor negotiations, but the firm’s analysis suggests that on average, about 4 weeks of a strike at each of the D3 companies has been priced in, and if a strike occurs, it too will pass. Tesla is well positioned for the long-term, but the firm prefers to await a better entry point with 2024 seen as a below trend growth year, the firm added.
Click here to check out Tesla’s recent Media Buzz Sentiment as measured by TipRanks.
ADDITIONAL CAPITAL RAISE:
UBS also started coverage of Rivian Automotive with a Neutral rating, citing similar reasons. For Rivian specifically, the firm believes the company should reach positive gross margin in 2024 but says larger volumes are not expected until later this decade and an additional capital raise will be needed to support future growth.
COMMERCIAL CLEAN VEHICLE CREDIT:
Shares of zero-emission commercial vehicles-maker Workhorse Group (WKHS) outperformed on Tuesday after announcing IRS approval for Commercial Clean Vehicle Credit. Workhorse Group said that it has received IRS approval as a qualified manufacturer for the Commercial Clean Vehicle Credit as defined in 30Dd3 of the Internal Revenue Code. With this approval, Workhorse customers are eligible to receive up to a $40,000 credit for deliveries of all Workhorse vehicles in 2023 and beyond.
PROBE INTO CHINESE EVS:
The European Commission has launched a probe into subsidies given to electric vehicle makers in China, President Ursula von der Leyen said at her annual State of the Union address at the European Parliament in Strasbourg, CNBC’s Matt Clinch and Sam Meredith report. “Europe is open to competition but not for a race to the bottom,” she said. The Fly notes that stocks that may be impacted by the news include Nio (NIO) and XPeng (XPEV).
SHARES TO REMAIN RANGEBOUND:
Truist downgraded Enphase Energy (ENPH). The firm sees the shares remaining rangebound on the potential for U.S. residential weakness extending into 2024. Truist expects Enphase to play a meaningful role in the theme of home electrification over the coming years, but sees potential for a prolonged recovery in U.S. residential solar and storage acting as a headwind to shares in coming quarters.
BMO Capital upgraded First Solar (FSLR). The stock has declined by an “unwarranted degree” following the company’s recent analyst day, the firm tells investors in a research note. BMO believes consensus estimates through 2026 are too low, but says investors remain focused on 2027 earnings power when First Solar is not fully sold out. However, at its current share price, and even using conservative assumptions for declines in selling prices and utilization rates, the stock’s risk/reward is attractive on “normalized” post 2026 adjusted EBITDA, contends the firm.
Originally Posted September 16, 2023 – What You Missed This Week in EVs and Clean Energy
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