What You Missed This Week in EVs and Clean Energy

Jefferies cuts Tesla target, argues cancelling Cybertruck “probably positive”

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 (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.

TARGET CUT: 

Jefferies lowered the firm’s price target on Tesla, while keeping a Hold rating on the shares. The firm appreciates future value from FSD, including licensing or Optimus, but “not as near-term substitutes to solid core performance.” Jefferies cut its 2023 EBIT estimate “again” by 15% to $8.7B on higher Q4 volume offset by the Cybertruck launch. However unlikely just a few days before first deliveries, cancelling Cybertruck “would probably be positive for shares” as it would help Tesla refocus on an edge that was built on simplicity, scale and speed, the firm argues.

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

MOVING TO THE SIDELINES: 

R.F. Lafferty downgraded Workhorse Group (WKHS) to Hold from Buy, after the company reported a Q3 GAAP net loss that missed consensus and reported actual revenues that were below consensus by approximately $18M. Given the slower-than-expected production ramp-up, the firm is trimming its 2024 revenue estimates to $64M, down from a prior estimate of $198M, and sees the potential of the company raising additional capital, thus increasing dilution.

BTIG also downgraded Workhorse Group to Neutral from Buy with no price target after the company reported Q3 earnings and lowered revenue guidance “again.” The firm cited concerns around customers delaying new vehicle spending and dealers keeping inventories lean.

Q3 PRE-RELEASE, C-SUITE REORGANIZATION: 

BofA downgraded ChargePoint (CHPT) to Neutral from Buy, after the company announced a management transition and guidance cut. Former CEO Pasquale Romano has been replaced by prior Rick Wilmer. CFO Rex Jackson has left the company and will be replaced by Mansi Khetani as an interim CFO who previously served as SVP of FP&A. In parallel, ChargePoint reduced its revenue outlook for Q3 to $108M-$112M from $150M-$165M and expects to take a non-cash impairment charge of $42M, BofA pointed out in a research note on Friday.

Stifel also downgraded ChargePoint to Hold from Buy, after the company cut its Q3 guidance and announced management changes. The firm said its model changes reflect slower near-term growth rates and lower gross margins, and its revised 10-year DCF supports the revised target price. Despite the weakness in the shares during the session, Stifel is now taking a “prove-it-to-me” approach to the story.

Voicing similar reasons, R.F. Lafferty, Oppenheimer and Roth MKM also cut ChargePoint’s rating to Neutral-equivalent ratings.

“SUBPAR” EXECUTION: 

Citi downgraded Plug Power (PLUG) to Neutral from Buy. The firm says “subpar execution” has led the company into liquidity challenges. Although there is a narrow way out of the near-term issues, the company’s margin of error is small, Citi tells investors in a research note. The firm believes the 45V production tax credit clarification, which was a potential catalyst, is now a “much-needed lifeline, which could also pose insurmountable challenges if unfavorable.” As such, Plug Power’s risk/reward is in favor of a Neutral rating, contends Citi.

SELL CANADIAN SOLAR: 

JPMorgan downgraded Canadian Solar (CSIQ) to Underweight from Neutral. The stock has modestly outperformed peers over the past couple of months despite significant declines in global module selling prices, which presents downside risk over the next few quarters, JPMorgan tells investors in a research note. The firm says that while the solar industry clears channel inventory over the coming quarters in certain markets, other areas of the value chain which have relatively more pricing power likes trackers and inverters will recover sooner than modules, driving its relatively less favorable view towards Canadian Solar over the near-term. JPMorgan expects the stock to underperform until visibility improves.

BALANCED RISK: 

UBS downgraded Brookfield Renewable Partners (BEP) to Neutral from Buy. The firm’s analysis identifies consistent wind and solar asset underperformance relative to long-term average expectations potentially pressuring the company’s growth. However, this risk is balanced by Brookfield Renewable’s below average corporate leverage, recent share buyback activity, and an increasingly diversified asset base, UBS tells investors in a research note.

IRA TAILWINDS: 

CL King initiated coverage of Bloom Energy (BE) with a Buy rating. While the global energy transition to renewable sources is in the early innings, results show slower progress than expected, which is a multiyear positive for Bloom and its “unique” Energy Server, CL King tells investors in a research note. The firm says the company will benefit from spending initiatives associated with the Inflation Reduction Act. These will provide additional tailwinds that should drive adoption of Bloom products and help it lower manufacturing costs, contends CL King.

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Originally Posted November 20, 2023 – What You Missed This Week in EVs and Clean Energy