What You Missed This Week in EVs and Clean Energy

Tesla downgrade at Philip Securities, which sees the near-term outlook as “quite bleak”

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.

‘QUITE BLEAK’ OUTLOOK: 

Phillip Securities downgraded Tesla. The near-term outlook for Tesla “looks quite bleak, with the company set on sacrificing margins and growth also slowing,” the firm tells investors in a research note. Phillip Securities cites near-term headwinds for the downgrade but says its longer-term thesis of Tesla leveraging its services and software-like margins from full-service driving and supercharging remains unchanged.

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

DEEP RIVIAN PRICE CUT: 

Deutsche Bank lowered the firm’s price target on Rivian Automotive. The company last week expanded its R1T and R1S configuration options to allow the cheapest Standard battery pack selection and introduced a new pack called “Standard+.” The firm believes the move is a “deep price cut without much improvement in cost, which could hurt the company’s financials.” It likely signals weakening of demand for R1, which reflects a broader slowdown in electric vehicle adoption, but could have significant consequences for Rivian, contends Deutsche. The firm worries the new cheaper configurations could deepen R1 losses and push out Rivian’s path and timeline to breakeven, lead to larger free cash flow burn, prompt the need for additional capital, and potentially even raise questions around future R2 profitability. It says the new Standard “packs as a clear negative signal.”

‘DISAPPOINTING’ GUIDANCE: 

Exane BNP Paribas downgraded BorgWarner (BWA). While the firm still views BorgWarner as one of the best-positioned for long-term success in transitioning to an electrified world among the legacy drivetrain suppliers, its prior thesis had called for “steady upside surprise” from BorgWarner’s foundational internal combustion engine business over the next three to four years and the firm no longer has conviction in that view following the company’s “disappointing” FY24 guidance.

MOVING TO THE SIDELINES: 

JPMorgan downgraded Bloom Energy (BE). The company reported Q4 results below expectations with a fiscal 2024 revenue outlook that was well below consensus, the firm tells investors in a research note. While encouraged by Bloom’s margin trajectory, JPMorgan believes specific visibility into the company’s targeted growth remains limited. Despite prospects for long-term growth arising from product and market expansion, the firm is “sidelined until there is better visibility into a more pronounced ramp in revenue and operating income.”

KeyBanc also downgraded Bloom Energy to Sector Weight from Overweight on Friday without a price target. The company reported below-consensus Q4 results and provided a weaker than expected 2024 outlook, the firm tells investors in a research note. KeyBanc says the lack of clarity around the timing of shipments to Korea and data center-related bookings makes for an uncertain first half of 2024, “at least.” This, in combination with the departure of a well-respected CFO with no clear successor in place, drives the downgrade pending more clarity, contends the firm.

SELL SUNPOWER: 

Guggenheim downgraded SunPower (SPWR) following the company’s announcement of a rescue financing package. While SunPower has solved its near-term liquidity problems, the cost to equity shareholders is “greater than the market seems to realize,” the firm tells investors. With operating expenses being cut and cash preservation a focus, Guggenheim doesn’t see how SunPower avoids losing market share in 2024 and it expects the company’s new MW additions to decline by about 20% this year.

BUY FIRST SOLAR: 

RBC Capital initiated coverage of First Solar (FSLR). As the global leader in thin film CdTe technology and the largest supplier and domestic manufacturer of solar modules in the U.S. the company has a demonstrated history of being able to grow production, reduce costs, and improve performance, says the firm, which believes the strong visibility for earnings growth and free cash flow generation are “underappreciated.” RBC thinks the share price is being weighed down by peers who face challenges that it thinks First Solar is “largely insulated against.”

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Originally Posted February 20, 2024 – What You Missed This Week in EVs and Clean Energy