Welcome to The Fly's latest edition of "Charged," where we look back at some recent analysts' notes, news and activity in the electric vehicle and clean energy space.
POLESTAR NEARS DEAL TO GO PUBLIC: Polestar Performance AB (PSNY) and its affiliates and Gores Guggenheim (GGPI) announced that they have entered into a definitive business combination agreement. Upon closing of the proposed business combination, the combined company will be held by a new public company that will be named Polestar Automotive Holding UK Limited, which is expected to be listed on Nasdaq under the ticker symbol "PSNY." The transaction implies an enterprise value of approximately $20B for the combined company, representing approximately 3.0x 2023E revenue and 1.5x 2024E revenue.
Over this weekend, The Wall Street Journal's Cara Lombardo reported, citing people familiar with the matter, that Polestar was nearing a deal to go public through such a merger with the special-purpose acquisition company. Polestar, which is owned by Chinese car maker Zhejiang Geely, focuses on high-performance electric cars, positioning itself as a rival to Tesla (TSLA) and Lucid (LCID). Zhejiang Geely is controlled by its billionaire chairman and founder Li Shufu. It owns Geely Automobile (GELYF), Volvo Car Group and several other electric-vehicle brands, Lombardo noted.
SELL TESLA, BUY FISKER: Tudor Pickering Holt analysts Matt Portillo, Oliver Huang, Jeoffrey Lambujon and Jake Roberts initiated coverage of Tesla last week 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 LORDSTOWN: Goldman Sachs analyst Mark Delaney downgraded Lordstown Motors (RIDE) to Sell from Neutral with an unchanged price target of $5, representing 34% downside from current share levels. The price target reflects the "competitive albeit growing" market for electric vehicles as well as the operational challenges that Lordstown is facing, including ramping production while facing supply chain and cash flow constraints, Delaney told investors in a research note. The analyst pointed out that Ford (F) is planning to bring out a battery electric vehicle F-150 in 2022 starting at $40,000 for fleets, compared to the Endurance pickup which Lordstown plans to price in the low $50,000 range. In addition, the current supply chain issues that the auto industry broadly is experiencing could complicate Lordstown's production ramp over the next year, Delaney added. He also acknowledged that the competitive landscape and the company's operational challenges remain concerns for him.
WORKHORSE SUSPENDS C-100 DELIVERIES: Workhorse Group (WKHS) provided an update to its ongoing review of the company's business and go-forward operating and commercial plans to transition from an advanced technology start-up to an efficient manufacturing company. The company said it has identified a number of enhancements in the production process and design of the C-1000 to address customer feedback, primarily related to vehicle dynamics to increase the vehicles' payload capacity. As Workhorse has identified these enhancements and continued its review and redesign of the C-1000, the company has decided to suspend deliveries of C-1000 vehicles and recall 41 vehicles it has already delivered. As part of these efforts, the new leadership team has determined that additional testing and modifications to existing vehicles are required to certify the C-1000 vehicles under Federal Motor Vehicle Safety Standard. The company expects to complete testing in the fourth quarter of 2021. Workhorse intends to provide an update on its operating and commercial plans on its upcoming third quarter 2021 earnings call.
BUY VOLTA: Needham analyst Vikram Bagri initiated coverage of Volta (VLTA) with a Buy rating and $15 price target. The analyst is positive on the company's position as a "differentiated" EV charging provider focused on locations with high visibility and traffic, which drives its high utilization and charging revenue. Bagri added that Volta generates diverse and predominantly recurring revenue streams through digital advertising, software tools and data analytics, which allows the company to offer a "compelling value proposition" to everyone involved in the value chain and creates a "significantly larger" target market than that of its peers.
ATTRACTIVE VALUATION: Credit Suisse analyst Maheep Mandloi initiated coverage of EVgo (EVGO) with an Outperform rating and $11 price target. EVgo is a U.S. market leader in building direct current fast chargers for passenger and commercial electric vehicles that run on 100% renewable energy, Mandloi told investors in a research note. The analyst believes the company benefits from "rapidly growing" electric vehicle adoption, supportive policies and potential incentives for the industry under the infrastructure bill. Mandloi sees an attractive valuation after the stock's recent pullback.
'TREMENDOUS' FORWARD MOMENTUM: Piper Sandler analyst Pearce Hammond upgraded Plug Power (PLUG) to Overweight from Neutral with an unchanged price target of $33. The recent pullback in the shares offers an attractive entry point as the company has "tremendous forward momentum" on its green hydrogen plans as well as electrolyzer sales. The analyst believes the upcoming analyst day should be a positive catalyst for the stock.
DOUBLE-DIGIT DIVIDEND GROWTH: KeyBanc analyst Sophie Karp reinstated coverage of NextEra Energy Partners (NEP) with an Overweight rating and $89 price target. Karp believes that NextEra Energy offers a high-quality portfolio of renewable assets with long-dated PPAs and heavily contracted cash flows, telling investors in a research note that the company is uniquely positioned to deliver on multiple years of double-digit dividend growth, along with visibility into that growth.
IMPROVED OPPORTUNITY: Raymond James analyst Frederic Bastien upgraded Brookfield Renewable Partners (BEP) to Outperform from Market Perform with a price target of $44, up from $41, following the company's annual investor meetings. The opportunity in front of Brookfield Renewable has materially improved since last fall, something Bastien believes is not reflected in the current unit price. Specifically, Brookfield Renewable Partners intends to lift its pace of capital deployment to the tune of 20%, drive above-average FFO per unit growth, and deliver project returns that are "head and shoulders" above those of most renewable developers today, the analyst contended.
ON THE SIDELINES ON BLOOM: Piper Sandler analyst Pearce Hammond initiated coverage of Bloom Energy (BE) with a Neutral rating and $21 price target. The analyst expects Bloom will generate "robust revenue growth in the years ahead" but waits for a better entry point into the shares. He views the current risk/reward as balanced.
MORE BULLISH ON ENPHASE THAN FIRST SOLAR: KeyBanc analyst Sophie Karp initiated coverage of First Solar (FSLR) with a Sector Weight rating. First Solar, as the largest U.S.-based solar manufacturer with the non-silicon-based product, is uniquely positioned to benefit from the unfolding policy initiatives favoring domestic content and creating barriers for imports, Karp told investors in a research note. At the same time, Karp feels First Solar is unlikely to benefit from the near-term price increases as its order book for 2021-2022 has been locked in for some time and the stock is trading at the upper and of its historical range.
The analyst also started coverage of Enphase Energy (ENPH) with an Overweight rating and $179 price target. Karp likes Enphase's core microinverters business, where it enjoys significant market share and is well positioned to capitalize on growth in the U.S. residential solar market. The analyst views the company's nascent storage/ESS business as a solid addition to the growth engine provided ongoing operational and financial discipline.
26% UPSIDE POTENTIAL: Evercore ISI analyst Sean Morgan initiated coverage of SunPower (SPWR) with an Outperform rating and $27 price target, representing 26% upside to the current share price. Investors are overlooking both industry and company specific long-term catalysts that will eventually help close the stock's "meaningful valuation discount relative to peers," Morgan told investors in a research note. The analyst pointed out that SunPower has refocused on residential solar distribution and generation, along with a commercial and industrial solar segment, which are both "growing into massive total addressable markets." The company's mix shift is tilting toward residential solar that should increase margins over time, Morgan contended.
Gores Guggenheim
+0.31 (+3.10%)
Tesla
+6.24 (+0.81%)
Lucid Group
+1.4 (+5.51%)
Geely Automobile
-0.055 (-1.84%)
Fisker
+0.51 (+3.41%)
Lordstown Motors
+0.035 (+0.46%)
Ford
+0.35 (+2.54%)
Workhorse Group
+0.25 (+3.33%)
Volta
+0.165 (+1.37%)
EVgo
+0.225 (+2.57%)
Plug Power
+0.81 (+3.01%)
NextEra Energy Partners
+0.01 (+0.01%)
Brookfield Renewable Partners
-0.205 (-0.54%)
Bloom Energy
+0.715 (+3.75%)
First Solar
+2.45 (+2.69%)
Enphase Energy
+1.58 (+1.03%)
SunPower
+0.69 (+3.11%)