The average analyst price target for QuantumScape stock is about $56 a share.
Courtesy QuantumScape
Electric-vehicle battery pioneer QuantumScape has a new bull. Cowen analyst Gabe Daoud launched coverage of the company Monday, rating shares Buy with roughly 20% upside from Monday’s close. Despite the developmental nature of the company, Daoud calls QuantumScape’s technology rock solid.
QuantumScape (ticker: QS) is developing solid-state, lithium anode batteries for electric vehicles that promise better safety and range while offering faster charging and lower cost. It’s a potential panacea for the electric-vehicle industry. “After [10-plus] years of R&D, [QuantumScape] appears poised to disrupt the lithium-ion battery industry,” wrote Daoud in a report that initiated coverage of the stock.
QuantumScape released some very encouraging battery data late in 2020. That data, however, was on a single-layer battery cell. The next challenge for the company is to test multiple-layer cells, which are closer to the final form of the battery that will make it into an electric car. In February, QuantumScape announced it had successfully tested a four-layer system. Daoud calls that a milestone adding, “Next steps include making the cells to commercial size … increasing the number of layers from four to 8-10 by year end, and optimizing the manufacturing process.”
Full commercialization is still years away. The electric-vehicle industry is still relatively small but growing rapidly. Daoud estimates that battery demand from electric vehicles in 2020 amounted to 134 billion watt-hours. (An AAA battery has about 2 watt-hours of juice in it.) That should grow more than 13-fold by 2030, making the EV battery industry worth $230 billion, according to the analyst.
QuantumScape batteries won’t be in production until mid-decade, but Dauod expects the company to have 4% to 5% of the total market, or roughly $10 billion in sales, by 2030.
There is a long way to go between now and 2030, but that projected level of sales supports his $57 price target, valuing the entire company at about $25 billion based on the almost 448 million shares outstanding including all the stock warrants and options outstanding.
With the new Buy rating, Quantum has two analysts rating shares Buy and two hold ratings. The average analyst price target is about $56 a share.
QuantumScape stock is up about 4.2% in premarket trading on Tuesday, to $48.85. Futures on the Nasdaq Composite, the home to many high growth tech stocks, were up 2.2%, bouncing back after the recent selloff. S&P 500 and Dow Jones Industrial Average futures are up about 1% and 0.3%, respectively.
Write to Al Root at [email protected]
