Tudor Pickering Holt analysts Matt Portillo, Oliver Huang, Jeoffrey Lambujon and Jake Roberts initiated coverage of Tesla (TSLA) with a Sell rating as they believe the stock "looks fundamentally overvalued" given that they would need to expect 8M automotive units delivered in 2030 with high adoption rates of a level 4+ FSD system to justify the current share price, which the analysts call "a tough ask." In a separate research note, they also started coverage of electric vehicle hopeful Fisker (FSR) with a Buy rating, saying the share price presents an interesting risk-reward.
SELL TESLA: Tudor Pickering Holt analysts Matt Portillo, Oliver Huang, Jeoffrey Lambujon and Jake Roberts initiated coverage of Tesla with a Sell rating and $537 price target. The analysts project vehicle sales increasing from about 863,000 units in 2021 to 5.1M units by 2030 and give the company credit for full self-driving, batteries, and robotaxis as well as significant expansionary growth in the Supercharger and Energy Generation and Storage business segments. However, even with all of that, the stock "still looks fundamentally overvalued" given that they would need to expect 8M automotive units delivered in 2030 with high adoption rates of a level 4+ FSD system to justify the current share price, which the analysts call "a tough ask even with significant expansion in new vehicle lines."
Additionally, they believe that Tesla’s lead in autonomy has narrowed significantly over the past few years and that it is vital the company delivers on its promise to have a level 4+ self-driving system in place, as FSD and connected services represent $112 per share in the analysts' valuation build up and is an important contributor to corporate gross margin expansion through 2030.
BUY FISKER: Meanwhile, Tudor Pickering analysts Lambujon, Roberts, Portillo and Huang also started coverage of Fisker with a Buy rating and $19 price target. While current equity value at least partially reflects a market awaiting additional execution over the next roughly 15 months until Ocean deliveries begin, the analysts believe the share price presents an interesting risk-reward. Industry comparisons for the Fisker Ocean SUV suggest that the anticipated run-rate of more than 60,000 unit sales per year is achievable. Fisker's strategic cooperative with Magna (MGA) that will utilize existing architecture and infrastructure can solidify and grow Fisker’s market share over time as additional vehicles are launched and the auto industry continues its shift toward electrification, they added.
The analysts believe a key differentiator for Fisker versus other EV start-ups will be its asset-light business model, whereby the company has sought out partnerships with existing manufacturers to utilize existing vehicle architecture and infrastructure toward being on track for its targeted 28-30 months development time. The company is targeting 20% gross margins and over 11% operating margins long-term once production ramps up to run-rate capacity, the analyst group added.
PRICE ACTION: In Thursday morning trading, shares of Tesla are fractionally higher at $752.70, while Fisker's stock has jumped about 5% to $14.32.
Magna
+1.85 (+2.44%)
Fisker
+0.53 (+3.88%)
Tesla
+1.89 (+0.25%)