What You Missed This Week in EVs and Clean Energy

Tesla named a Top Pick at Argus, Rivian downgraded to Peer Perform at Wolfe Research

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.

TESLA: 

Argus keeps the same rating on Tesla while naming the stock as one of the firm’s 2024 choice. Tesla has been challenged by a sluggish environment for electric vehicles as rising interest rates, elevated inflation, and supply-chain disruptions have pushed demand lower, but in 2024, these factors are set to turn positive as interest rates trend lower, benefiting customer affordability, inflation de-accelerates, benefiting vehicle manufacturing costs, and supply chains improve, the firm tells investors in a research note.

TESLA RECALL: 

Tesla has recalled nearly every car its ever sold in China after issues with the driver-assistance system Autopilot increased the risk of crashes, Bloomberg reports. Tesla will deploy an over-the-air software fix to move than 1.6M vehicles. Tesla drivers may misuse Autopilot functions, increasing the risk of collisions and posing safety risks, the State Administration for Market Regulation said in a statement, according to the publication.

RISING CONCERNS: 

Some executives and board members at Elon Musk’s companies fear the Tesla and SpaceX chief executive’s drug use could have major consequences not just for his health, but also the six companies and billions in assets he oversees, The Wall Street Journal‘s Emily Glazer and Kirsten Grind report, citing people familiar with the matter. The world’s wealthiest person has used LSD, cocaine, ecstasy and psychedelic mushrooms, often at private parties around the world, where attendees sign nondisclosure agreements or give up their phones to enter, according to people who have witnessed his drug use and others with knowledge of it. Illegal drug use would likely be a violation of federal policies that could jeopardize SpaceX’s billions of dollars in government contracts, the authors add.

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

MOVING TO THE SIDELINES: 

Last week, Wolfe Research downgraded Rivian Automotive to Peer Perform from Outperform with no price target. While the firm continues to believe in Rivian’s long-term strategy and has been encouraged by their recently strong production and cost execution, it believes that investors will need more insight into demand for the company’s R1 platform which has to carry them through 2024 and 2025 before being willing to look further out to the launch of their R2 platform in 2026.

SOFT GROWTH MOMENTUM: 

Goldman Sachs initiated coverage of Nio (NIO) with a Neutral rating. Nio is one of the first pure EV start-ups in China with a focus on the premium BEV segment, but it has been losing market share in China and the firm has concerns over soft growth momentum due to relatively fewer new product launches compared to peers and cost control and cash flow management.

LI AUTO: 

Goldman Sachs initiated coverage of Li Auto (LI). Li is a “leading” pure NEV player with 5% NEV market share in China and the firm expects the competitive positioning of BEV models and deepening sales network to drive another leg of growth for Li Auto, the firm tells investors.

WALL STREET DISAGREES ON ENPHASE: 

KeyBanc downgraded Enphase Energy (ENPH) to Sector Weight from Overweight without a price target. The firm believes the timing of recovery in demand is uncertain due to a “poorly quantifiable inventory glut in the channel.” The issue has persisted for much longer than the firm initially anticipated, and the visibility there is low, including for the management team itself, KeyBanc tells investors in a research note. The firm sees the window for the stock to “work” as narrow in 2024.

Moving in the opposite direction, Wells Fargo upgraded Enphase Energy. The firm expects the solar sector to rebound in 2024, driven by Federal Reserve rate easing, higher battery attaches rates, clarity on the Inflation Reduction Act, and steady utility scale demand growth. Wells prefers residential to utility solar scale given greater rate sensitivity. On the flip side, the firm downgraded First Solar (FSLR) and Array Technologies (ARRY) to Equal Weight from Overweight.

MORE BEARISH ON SUNPOWER: 

More bearish on the name, Wells Fargo downgraded SunPower (SPWR). The rating change is part of the firm’s 2024 outlook, with the firm citing liquidity related headwinds for the downgrade of SunPower.

Late last week, Raymond James also downgraded SunPower to Market Perform from Outperform without a price target. The firm cited the uncertainty around the going-concern statement disclosed in December “in the broader context of investor scrutiny of any credit risk” for the downgrade. SunPower doesn’t have “an obvious balance-sheet problem,” which means “it ought to be realistic to negotiate a mutually acceptable agreement with the lenders,” Raymond told investors in a research note. However, the main question is whether such an agreement would require a dilutive equity raise, said the firm.

DOWNGRADE SUNRUN ON VALUATION: 

KeyBanc downgraded Sunrun (RUN) to Sector Weight from Overweight without a price target, citing the recent valuation rebound. After the recent change in the Federal Reserve’s interest rate stance, Sunrun staged a mini-rebound, lifting off of the lows, the firm tells investors in a research note. Following this correction, KeyBanc notes that Sunrun trades significantly closer to its net asset value. Given its overall negative stance on the space, KeyBanc prefers to stick to the more discounted name, Sunnova Energy (NOVA), as its sole Overweight in the space.

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Originally Posted January 8, 2024 – What You Missed This Week in EVs and Clean Energy