Amazon and Ford backed EV Truck-maker Rivian raises another $2.65B
Welcome to The Fly's latest edition of "Charged," where we look at some analysts' notes, news and activity in the electric vehicle and clean energy space.
'YEARS FASTER THAN COMPETITORS': Oppenheimer analyst Colin Rusch raised the firm's price target on Tesla (TSLA) to $1,036 from $486 to reflect the assumption that the company's autonomous vehicle commercialization can come "years faster than competitors," plus equity market multiple appreciation. While he has "misgivings" about Tesla not incorporating LiDAR into its vehicles yet, Rusch believes the learning cycles enabled by having over 1M vehicles on the road is "an extraordinary advantage" that can help Tesla's shadow mode data collection to reach the threshold of 6B test miles being driven that should validate L4+L5 ADAS. He keeps an Outperform rating on the shares.
Deutsche Bank analyst Emmanuel Rosner also raised his price target on Tesla to $890 from $705, while keeping a Buy rating on the shares. The analyst sees "strong" volume growth in 2021 for U.S. autos and an ongoing "solid" mix and pricing helped by easy compares, low inventories, and COVID-19-induced demand for comfort, privacy and protection. The Democrat victory in U.S. Congress could also result in demand upside from large federal spending on infrastructure and toward vehicle electrification, Rosner told investors in a research note. He believes there is room for upside 2021 guidance surprises.
SOLAR INVERTER: Earlier this week, Goldman Sachs analyst Brian Lee told investors to buy the dip on Enphase Energy (ENPH) following news that Tesla will launch a solar inverter. Following a series of channel checks, Lee believes concerns around the risk of Tesla significantly impacting the U.S. residential inverter duopoly of Enphase and SolarEdge (SEDG) may be overstated, though Tesla's insourcing of inverters is likely to impact SolarEdge to some degree, given the historical supply relationship between the two. The analyst made no change to his Buy rating on Enphase or Neutral rating on SolarEdge.
BUY SOLAREDGE: Morgan Stanley analyst Stephen Byrd initiated coverage of SolarEdge with an Overweight rating and $354 price target, calling the company the "world leader in the solar photovoltaic inverter market." The analyst believes the company will continue to gain share in this fast growing space and penetrate "other equally exciting markets" such as energy storage solutions, e-mobility, and uninterrupted power supply.
ANOTHER EV SPAC DEAL: On Friday, EVgo Services, which identifies itself as "the nation's largest electric vehicle public fast charging network in the U.S.," and Climate Change Crisis Real Impact I Acquisition Corporation (CLII) announced a definitive agreement for a business combination that would result in EVgo becoming a publicly listed company. Upon closing of the transaction, the combined company will be named EVgo Inc. and publicly listed under the symbol "EVGO". The transaction will "further elevate EVgo's position as an industry-leading builder, owner and operator of public EV fast charging in the U.S. by funding and accelerating the company's growth strategy," the company stated. Completion of the proposed transaction is subject to customary closing conditions, including the approval of the stockholders of CRIS, and is expected to occur in the second quarter of 2021.
RIVIAN RAISES ANOTHER $2.65B: EV maker Rivian has gathered another $2.65B for its war chest to compete with a bevy of electric truck hopefuls, The Wall Street Journal's Ben Foldy reported. T. Rowe Price Associates was the lead in this latest round of capital raising, which also included other backer of the EV truck maker Fidelity Investments, Coatue Management and Amazon (AMZN), the author noted. "The influx of capital for the Irvine, Calif.-based company came at a valuation of $27.6B," the publication added. Ford (F) was also an earlier investor in Rivian, taking a a $500M stake in in 2019.
PURCHASE ORDER: Workhorse (WKHS) announced that it has received a purchase order for 6,320 C-Series all-electric delivery vehicles from Pride Group Enterprises. The order is split between Workhorse's C-1000 and C-650 models and is subject to various production and delivery conditions. Inventory financing is being provided by Hitachi Capital America as part of the Company's previously announced strategic partnership with HCA. Initial delivery of the vehicles may begin by July 2021 and will run through 2026. The delivered vehicles will be distributed through Pride dealerships for fleet use.
Commenting on the news, Roth Capital analyst Craig Irwin said he does not believe the agreement covers Pride's own fleet, noting that Pride Group only operates 260 power units and 640 trailers in its company-owned logistics business. The purchase order with Pride "seems like it could more closely resemble a sales and distribution agreement," Irwin said. The analyst is "cautious" on Workhorse shares at current levels "given the sluggish deliveries ramp." He kept a Neutral rating on the name with a $19 price target.
LI AUTO, NIO INITIATIONS: On January 19, Jefferies analyst Alexious Lee initiated coverage of Li Auto (LI) with a Buy rating and $44.50 price target. Li One's EREV powertrain has proven a great success, which should allow it to turn operating cash flow positive and profitable earlier than peers, Lee argued. The analyst projects Li's sales to grow 100% and 86% year-over-year in fiscal years 2021 and 2022, respectively, both of which are ahead of consensus.
Lee also started coverage of Xpeng (XPEV) with a Hold rating and $54.40 price target. While the company has "very strong exposure to tech-driven growth" from accelerating sales of P7 and its next Lidar equipped model, Lee's fiscal year 2021 forecast of 120% sales growth is lower than consensus. However, his fiscal year 2022 forecast of 129% is higher given expectations for slower market acceptance and higher competition in its price segment.
Lastly, Lee initiated coverage of NIO Inc. (NIO) with a Hold rating and $60 price target. While calling NIO "China's icon for luxury BEVs," Lee argued that investors' expectations are high given the company's new model and better introduction during NIO day. The analyst also noted that the firm's fiscal years 2021 and 2022 revenue forecasts for NIO are 10% behind consensus.
On Friday, Nomura analyst Martin Heung initiated coverage of NIO Inc. with a Buy rating and $80.30 price target. The analyst likes NIO for its "Tesla-like top-down approach" in launching its electric vehicle pipeline, starting with its luxury flagship model ES8, followed by "more consumer friendly models and variants." NIO has successfully established itself as a premium auto brand "given car buyers are willing to pay a price similar to those for entry-level models of major European luxury original-equipment-manufacturers," Heung told investors. The analyst believes NIO's battery-leasing program "paves the way for the revolutionary concept of battery swapping." His price target is based on a 25% discount to Tesla's current price-to-sales ratio of 26 times, Heung noted.
'ABSURD' VALUATION: Kerrisdale Capital said via Twitter that it was short Plug Power (PLUG). "We're short $PLUG... Plug isn't a way to bet on the overhyped 'hydrogen economy'; it's just a /r/wallstreetbets roach motel where your fellow travelers probably failed HS chemistry... Valued at an absurd $40b, PLUG is a forklift power-source maker that makes the worst forklift power sources in the market. The stock has become a beneficiary of the hopes, dreams, and delusions of the green hydrogen energy movement, but the "Hydrogen Economy" is a mirage... The world will *never* meaningfully use 'green' hydrogen for energy. It's too expensive and inefficient to make, store, transport, and use," the tweets read.