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Morgan Stanley invades the EV space; Offers 2 shares to buy
We are really living in interesting times – and in many ways, this is a good thing. Take the automotive industry, for example. Technology is changing at a rapid pace, and when it stabilizes, it will drastically change the way we drive. In 2030, our ‘car’ concept is likely to be unrecognizable to drivers from 1980 onwards. The biggest changes come from energy systems and artificial intelligence. AI will bring autonomous technology to our cars, making autonomous vehicles a reality. But changes in energy systems will hit us first. In fact, electric vehicles are already on our roads and electric vehicle (EV) companies are proliferating rapidly. There are currently several paths to potential success in the EV market. Companies are working to position themselves as leaders in battery technology, or electric power trains, or to maximize their reach and performance per charge. It is a fact-based industry environment that offers opportunities and excitement for investors. Smart investors will look for companies capable of meeting the demands of scale, once they have established themselves in marketable models. Investment firm Morgan Stanley has been watching the EV industry for innovative design and production companies that are positioning themselves to make gains as the market matures. The company’s automotive analyst, Adam Jonas, selected two stocks that investors should seriously consider buying, saying: “As we research the EV / battery startup scenario, we are prioritizing highly differentiated technologies and / or business models with a path to scale at a reasonable level of risk. ”Opening the TipRanks database, we look at the details of both of Jonas’ choices to see if they fit well in his portfolio. Fisker (FSR) First of all, Fisker, is based in Southern California, the epicenter of many of our innovative technology industries. Fisker’s focus is on solid-state battery technology, a growing alternative to the lithium-ion batteries on which most EVs depend. Although more expensive than older lithium-based systems, solid-state batteries are safer and offer greater energy density. Fisker has been busy patenting his movements on solid-state batteries, a solid strategy to halt his advances in this field. For EVs, solid-state batteries offer faster charging times, greater range per charge and potentially less battery weight – all important factors in vehicle performance. Each automaker needs a flagship model, and Fisker has the Ocean – a mid-priced EV SUV ($ 37,499) and a long-range power system (up to 300 miles). The vehicle features an elegant design and solar panels mounted in rooms to complement the charging system, and is scheduled to enter series production for the markets in 2022. The elegant design reflects the sensibilities of the company’s founder, Henrik Fisker, known for his work on the BMW Z8 and the Aston Martin DB9. Fisker entered the public markets through a SPAC merger agreement last fall. Since the completion of the SPAC transaction on October 29, FSR’s shares have risen 112%. Morgan Stanley’s Jonas is impressed by this company, describing the ‘Fisker value proposition’ as “… design, time to market, clean sheet user experience and management expertise” and saying the 4Q22 launch schedule to the ocean will probably be fulfilled. “Fisker is specifically targeting the passenger car / personal property business, as opposed to the commercial-oriented end markets, where exciting design and user experience are more important. In addition, the company wants to create a fully digital experience from the website to the app and HMI in the car and the continued engagement of the customer through its flexible leasing product, ”added Jonas. In line with his optimistic outlook on the company (and the car), Jonas ranks Fisker as Overweight (meaning Buy), and sets a price target of $ 27, suggesting a 42% hike for next year. (To see Jonas’ history, click here) Turning to the TipRanks data, we found that Wall Street analysts have a variety of views on Fisker. The stock has a moderate purchase analyst consensus rating, based on 7 reviews, including 4 purchases, 2 holds and 1 sale. The shares are currently quoted at $ 18.99, and the average price of $ 21.20 implies an increase of approximately 12% in one year. (See FSR stock analysis at TipRanks) QuantumScape (QS) Where Fisker is working on solid state batteries in the context of vehicle production, QuantumScape is establishing itself as a leader in EV battery technology and a potential supplier of the next generation of batteries and power systems for the EV market. QuantumScape designs and builds solid state lithium metal batteries, the highest energy density battery system currently available. The main advantages of the technology are safety, service life and charging times. Solid-state batteries are not flammable; last longer than lithium-ion batteries, with less loss of capacity at the anode interface; and its composition allows a faster loading, of 15 minutes or less, to reach 80% of the capacity. QuantumScape is betting that these advantages will outweigh the current higher cost of the technology and will set a new standard in EV power systems. The company’s strongest link to the EV production field is its connection to Volkswagen. The German auto giant invested $ 100 million in QuantumScape in 2018, and another $ 200 million in 2020. The two companies are using their partnership to prepare for large-scale development and production of solid-state batteries. Like Fisker, QuantumScape went public through a SPAC agreement late last year. The deal, which closed on November 27, placed the QS ticker on public markets – where it promptly rose above $ 130 per share. Although the stock has since declined, it remains 47% above its opening on the NYSE. For Morgan Stanley’s Jonas, involvement in QS shares carries high risk, but also high potential for reward. In fact, the analyst calls it “The biotechnology of battery development”. “We believe that its solid state technology addresses a major obstacle in battery science (energy density) that, if successful, can create extremely high value for a wide range of customers in the automotive industry and beyond. The risks of passing from a single cell layer to a production car are high, but we think they are balanced by the commercial potential and the role of Volkswagen to help finance the initial production ramp, “explained Jonas. Noting that QS is a long-term stock, Jonas values the stock as Overweight (ie Buy), and its target price of $ 70 indicates confidence in a 28% upside over the year. Okay, not everyone is as excited about QS as Morgan Stanly. The QS consensus wait rating is based on a uniform division between buy, wait and sell assessments. The shares are quoted at $ 54.64 and their recent appreciation has pushed them well above the average target price of $ 46.67. (See TipRanks QS stock analysis) To find good ideas for trading EV shares at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.