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Morgan Stanley storms into EV space; Offers 2 shares to buy
We do live in interesting times – and in many ways that is a good thing. Take the automotive industry, for example. Technology is changing at a rapid pace, and when it settles down, it will radically change the way we drive. In 2030, our concept of ‘car’ will probably be unrecognizable to motorists from 1980 onwards. The biggest changes come from energy systems and artificial intelligence. AI brings autonomous technology into our cars, making self-driving vehicles a reality. But the changes in the energy system will hit us first. In fact, electric-powered vehicles are already on our roads, and electric vehicle (EV) businesses are growing rapidly. At the moment there are several paths to potential success in the EV market. Companies are working to position themselves as leaders in battery technology, or electric powertrains, or to maximize their range and performance per charge. It is an industrial environment full of facts, offering investors both opportunity and excitement. Savvy investors will look for companies capable of meeting scale requirements as soon as they settle for marketable models. Investment firm Morgan Stanley has been keeping an eye on the EV industry, looking for innovative new design and manufacturing companies that are positioning themselves for profit as the market matures. The company’s auto analyst, Adam Jonas, has selected two stocks that investors should seriously consider buying, saying, “As we explore the electric vehicle / battery start-up landscape, we prioritize strong differentiated technology and / or business models with a reasonable level of risk. “By accessing the TipRanks database, we pulled the details of both of Jonas’ picks to see if they fit well with your portfolio. Fisker (FSR) First, Fisker is located in Southern California, the epicenter of so many of our breakthrough engineering industries. Fisker’s focus is on solid-state battery technology, a growing alternative to the lithium-ion batteries on which most electric vehicles depend. While more expensive than older lithium-based systems, solid-state batteries are safer and provide higher energy densities. Fisker has been busy patenting its steps towards solid-state batteries, a good strategy to document its advancements in this area. For EVs, solid-state batteries offer faster charge times, longer range per charge and potentially lower battery weight – all important factors in vehicle performance Every car company has a flagship model needed, and Fisker has the Ocean – an EV SUV with a mid-range price ($ 37,499) and long-haul power system (up to 300 miles). The vehicle has a stylish design and room-mounted solar panels to complement the charging system, and is expected to enter series production for the markets in 2022. The stylish design reflects the sensibilities of company founder Henrik Fisker, known for his work on the BMW Z8 and Aston Martin DB9. Fisker entered the public markets through an SPAC merger agreement last fall. Since the closing of the SPAC transaction on October 29, shares in FSR are up 112%. Morgan Stanley’s Jonas is impressed with this company, describing Fisker’s ‘value proposition’ as “… design, time-to-market, clean sheet user experience and management expertise”, saying the 4Q22 ocean launch schedule is likely will be met. “Fisker focuses specifically on the personal ownership / passenger car business, as opposed to commercially oriented end markets, where emotional 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 the HMI in the car, and enduring customer engagement through its flexible leasing product, ”added Jonas. In line with his optimistic view of the company (and the car), Jonas rates Fisker as an Overweight (i.e.Buy) and sets a price target of $ 27, suggesting a 42% increase for the coming year. (To view Jonas’ track record, click here) As for the TipRanks data, we found that Wall Street analysts have a range of opinions about Fisker. The stock has an average buy analyst consensus rating, based on 7 reviews, including 4 buy, 2 hold and 1 sell. The stock is currently priced at $ 18.99 and the $ 21.20 average price target implies a ~ 12% rise for a year. (See FSR stock analysis on TipRanks) QuantumScape (QS) Where Fisker works on solid-state batteries in the context of vehicle manufacturing, QuantumScape is establishing itself as a leader in EV battery technology and a potential supplier of next-generation batteries and power systems for the EV market. QuantumScape designs and builds solid-state lithium metal batteries, the highest energy density battery system available today. The main advantages of the technology are safety, service life and charging times. Semiconductor batteries are not flammable; they last longer than lithium-ion batteries, with less capacity loss at the anode interface; and their composition allows for faster charging, from 15 minutes or less to reach 80% capacity. QuantumScape is betting that these benefits outweigh the current higher cost of the technology and create a new standard in electric vehicle electrical systems. The company’s strongest relationship with electric vehicle production is its relationship with Volkswagen. The German automotive giant put $ 100 million into 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 at the end of last year. The deal, signed on Nov. 27, put the QS ticker in the public markets – where it promptly rose above $ 130 a share. Although the stock has since slipped, it remains 47% higher than at the NYSE opening. For Jonas of Morgan Stanley, getting involved in QS stocks involves high risk, but also high potential reward. In fact, the analyst calls it “The Biotech of Battery Development.” “We believe that their solid-state technology addresses a very large barrier 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. of a single layer cell for a production car are high, but we think these are offset by the commercial potential and Volkswagen’s role in helping endorse the early production ramp, ”Jonas explained. Jonas notes that QS is a share for the long term and rates the stock as overweight (ie buy), and its $ 70 price target indicates confidence in a 28% gain for a one year time horizon. Granted, not everyone is as enthusiastic about QS as Morgan Stanly. of QS is based on an even split between buy, hold and sell ratings. The stock is priced at $ 54.64 and their recent appreciation h pushed them well above the average target price of $ 46.67. (See QS Stock Analysis on TipRanks) To find great ideas for EV stocks trading at attractive valuations, visit TipRanks ‘Best Stocks to Buy, a recently launched tool that brings together all of TipRanks’ insights on stocks. Disclaimer: The opinions expressed in this article are solely those of the Recommended Analyst. The content is provided for informational purposes only. It is very important to conduct your own analysis before making an investment.