Goldman Sachs analyst Mark Delaney remains constructive on growth in EVs
Shares of Lordstown Motors (RIDE) and Fisker (FSR) are under pressure after Goldman Sachs analyst Mark Delaney downgraded the former to Neutral and the latter to Sell. The analyst argued that Lordstown's recent issues with the Baja race, as the vehicle ran out of battery after about 40 miles, suggests there could be more development work to do on the powertrain than expected. Regarding Fisker, Delaney is "increasingly concerned" about the company's "late time to market" as competition increases.
MOVING TO THE SIDELINES: Goldman Sachs analyst Mark Delaney downgraded Lordstown Motors to Neutral from Buy with a price target of $10, down from $21. The analyst believes Lordstown's plan to be the first mover in the fleet focused part of the electric vehicle pickup truck market "gives it an opportunity to be successful long-term." However, the company's recent issues with the Baja race, as the vehicle ran out of battery after about 40 miles, suggests there could be more development work to do on the powertrain than expected, Delaney contended. This factor, coupled with the global auto supply chain challenges that are making it difficult to obtain parts, could increase the probability that Lordstown's market entry will be delayed, the analyst added.
SELL FISKER: Delaney also downgraded Fisker to Sell from Neutral with a price target of $10, down from $15. While the analyst appreciates the steps the company is taking to try to differentiate its upcoming products, Delaney is "incrementally concerned" about the company's "late time to market" as competition increases. Fisker is planning to enter the industry starting in the fourth quarter of 2022 with its Ocean SUV and also announced a plan for a "unique follow-on vehicle" with Foxconn (HNHPF) that could enter the market around the fourth quarter of 2023, Delaney noted. By the time this vehicle may be ramping, the competitive landscape "could be even more challenging," Delaney told investors in a research note. He sees benefits to Fisker's planned use of outsourced manufacturing, but does not consider the manufacturing model itself to be the key determinant of long-term product success.
GROWTH IN EVS: Nonetheless, Goldman Sachs' Delaney remains "very constructive" on growth in electric vehicles. The analyst believes ways to invest for exposure to the growth in EVs include select OEMs, such as Tesla (TSLA) and General Motors (GM), and electronics components companies that have higher content on EVs, including TE Connectivity (TEL), Amphenol (APH) and Aptiv (APTV), which broadly sell into the OEM space.
PRICE ACTION: In morning trading, shares of Lordstown have dropped over 1% to $9.65, while Fisker's stock has slid almost 9% to $13.85.