Volta Industries and SPAC Tortoise Acquisition Corp. II announced they intend to merge
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.
BITCOIN INVESTMENT: Tesla (TSLA) said in a Securities and Exchange Commission filing Monday that it bought $1.5B worth of bitcoin and that it plans to begin accepting it as a form of payment for its products in the near future. This comes amid a couple of positive messages about digital currencies by Elon Musk on Twitter. Commenting on the announcement, Wedbush analyst Daniel Ives said he believes Tesla's move could put more momentum into shares as more investors start to value the company's bitcoin/crypto exposure as part of the overall valuation.
VOLTA TO GO PUBLIC VIA SPAC: Volta Industries and Tortoise Acquisition Corp. II (SNPR), a publicly traded special purpose acquisition company with a focus on energy sustainability and decarbonizing transportation, announced they intend to merge. Upon the closing of the transaction, the combined entity will be named Volta and remain on the NYSE under the new ticker symbol (VLTA). The pro forma equity value of the combined company is expected to exceed $2B at the $10.00 per share PIPE price and assuming minimal redemptions by Tortoise Acquisition Corp. II public shareholders. Anticipated net proceeds of approximately $600M will be used to accelerate Volta's buildout of its charging network already in the pipeline. This includes an upsized $300M fully committed private placement of common stock in the combined company. The PIPE is anchored by institutional investors. The pro forma enterprise value of the combined company is expected to be approximately $1.4B at the $10.00 per share PIPE price. Scott Mercer will continue as CEO of the combined company. MORGAN STANLEY EXPANDS EV COVERAGE: On Thursday evening, Morgan Stanley analyst Adam Jonas initiated coverage of Fisker (FSR) with an Overweight rating and $27 price target as part of a broader research note titled "Expanding the EV Universe". The analyst says the company is a play on an all new, asset-light, design-centered EV business model that improves time to market and break-even points. Jonas adds that Fisker stands out as one of the more de-risked and strategically underpinned business models.
Jonas also initiated coverage of QuantumScape (QS) with an Overweight rating and $70 price target. The analyst said that it is among companies in the electric vehicle battery space offering "the most compelling strategies" and positive risk/reward skews. Jonas added that the company has been developing "game changing" solid state cell technology and has achieved "promising results" with its patent ceramic separator.
Morgan Stanley's Jonas additionally initiated coverage of Romeo Power (RMO) with an Underweight rating and $12 price target. The analyst said that the company's value proposition is "particularly appealing" to smaller scale OEMs, fleets, and startups that need a fast solution on electric vehicles, but can't commit the capital and vertical integration to do so in-house. That said, Jonas said competition from OEM in-sourcing and battery company integration may prove "formidable" for Romeo Power.
Jonas also started coverage of Lordstown Motors (RIDE) with an Underweight rating and $18 price target as part of his broader research note. The company is benefiting from a nearly free plant that was acquired from GM and a "highly experienced" management team with a plan to enter the commercial pickup market, the analyst told investors. Jonas warns, however, that Lordstown faces a flood of new competition in EV pickups from startups and legacy OEMs with far greater scale and distribution advantages.
INVESTMENT TAX CREDIT: In a research note to investors on Monday, Roth Capital analyst Philip Shen highlighted a bill that was introduced to the House Ways and Means Committee on Friday that could extend the investment tax credit for five years at 30% and include storage, provide an 85% direct pay option, and create an additional 10% tax credit for construction jobs meeting certain labor requirements. The analyst's channel checks suggest the bill currently does not have any Republican support. This could be part of a larger infrastructure bill or perhaps a slimmed down Green Act, with checks suggesting the timing of passage could be late spring or early summer depending the vehicle it is attached to, says Shen. Further, the analyst believes the passage of the bill could be a "meaningful positive" for nearly every company in his coverage universe including, Enphase Energy (ENPH), SolarEdge (SEDG), Generac (GNRC), Sunnova Energy (NOVA), Sunrun (RUN), SunPower (SPWR), First Solar (FSLR), Array Technologies (ARRY), JinkoSolar (JKS), Canadian Solar (CSIQ), Daqo New Energy (DQ), Maxeon Solar (MAXN), Hannon Armstrong (HASI), TPI Composites (TPIC) and AMSC (AMSC).
'LOWER VISIBILITY' REASONS EMERGE: On Tuesday, Craig-Hallum analyst Richard Shannon lowered the firm's price target on Velodyne Lidar (VLDR) to $29 from $31, while keeping a Buy rating on the shares ahead of quarterly results. The analyst believes he has identified two potential situations driving management's comments of "lower visibility" in the automotive market called out on its negative Q4 preannouncement. First, Veoneer's (VNE) comments that an OEM customer went with a different LiDAR tech than Velodyne's. Second, the analyst also highlighted reports of Hyundai (HYMTF) choosing production-ready Valeo over Velodyne. Along with fewer ADAS projects exiting Q4 than the prior quarter, this suggests more difficulties in the auto market that need to be better understood, Shannon contended.
INVESTOR INTEREST TO CONTINUE: B. Riley Securities analyst Christopher Souther raised the firm's price target on SolarEdge (SEDG) to $367 from $364, while keeping a Buy rating on the shares. The analyst expects the significant investor interest seen in 2020, and thus far in 2021, drawn to the sustainable energy and technology sector to continue, but he does not expect the multiple expansion seen over the past year to be repeatable as the key driver for shares in 2021. Heading into earnings, investors should take a more focused approach on the company and sector catalysts that could drive shares higher, Souther told investors in a research note. The analyst sees the Biden infrastructure agenda as likely benefitting the entire group.
STREET-HIGH PRICE TARGET: On Wednesday, JMP Securities analyst Joseph Osha raised the firm's price target on First Solar to a Street-high $141 from $135, keeping an Outperform rating on the shares. The analyst updated his valuation model to reflect the company's recent sale of its project development business. Osha also stated that the view of First Solar's above-market pricing having to "inevitably recouple" with the lower pricing seen in the marketplace is incorrect, as even before the change in U.S. political leadership, project developers were willing to tolerate higher pricing in exchange for high-quality, predictable delivery and the absence of any risk around tariffs or other disruptions.
TARGETS UPPED AFTER EARNINGS: Goldman Sachs analyst Brian Lee raised the firm's price target on Enphase Energy to $266 from $232, while reiterated a Buy rating on the shares following the "big beat" in the fourth quarter. The analyst believes the quarter highlights the ongoing momentum in residential solar. Enphase's first quarter revenue guidance points to 80% year-over-year growth organically at a $290M midpoint when excluding last year's safe harbor revenues, driven by a backdrop of demand strength in both microinverters and batteries, Lee added. He views Enphase Energy as one of the "premium growth stories in our coverage."
Roth Capital analyst Philip Shen also raised his price target on Enphase Energy to $260 from $220 and kept a Buy rating on the shares following a "strong" fourth quarter beat and first quarter guide. With the backdrop of another ITC extension, the analyst sees business ramping well. Near-term, he expects management to work through ASIC/AC FET driver constraints and mitigate the friction of commissioning/installing/managing storage.
Additionally, Barclays analyst Moses Sutton raised his price target on Enphase Energy to $256 from $233 and kept an Overweight rating on the shares, while B. Riley Securities analyst Christopher Souther upped the stock's target to $167 from $151 but maintained a Neutral rating on the name.