Car batteries at a factory.
STR/AFP via Getty Images
Electric-vehicle battery technology company QuantumScape picked up a new rating. It’s lukewarm, but the stock is rising Wednesday.
Deutsche Bank analyst Emmanuel Rosner launched coverage of QuantumScape (ticker: QS) with a Hold rating and $20 price target, which is above the stock’s market price.
Hold ratings don’t usually excite investors, but QuantumScape stock is up 2.3% to $18.17 in early trading Wednesday. The S&P 500 and Dow Jones Industrial Average are both up about 0.1%.
The stock might be getting a bump because it’s been badly beaten up. Coming into Wednesday trading, shares were down about 20% year to date and down about 87% from an all-time high of almost $133 in December 2020.
Inflation and rising interest rates have sapped investor enthusiasm for more-speculative, high-growth ideas. QuantumScape qualifies as one of those. The company is pioneering solid-state-battery technology. Solid state, in this instance, refers to a battery without a liquid electric-charge facilitator. Solid-state batteries are hard to make, but promise better range, safety and cost that traditional batteries.
QuantumScape isn’t expected to generate sales until 2023, and only $1.3 million at that, as it is still developing the technology.
At Rosner’s $20 target, the company’s market value would be about $6.7 billion. So the valuation reflects a lot of future growth. QuantumScape has “secured large investments from Volkswagen [VOW3.Germany] and partnerships with three other global auto makers, providing a solid path to commercialization once the development is complete,” wrote Rosner. “At the same time, QuantumScape still needs to demonstrate it can scale up its technology and solve large technical challenges ahead, and even if all goes according to plan, the company is still several years away from mass manufacturing and even further from monetizing it.”
Overall, most analysts see things Rosner’s way. Nine analysts cover the stock. Eight have Hold ratings, and one is at Buy. The Buy-rating ratio is just 11%. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
The average analyst price target for QuantumScape stock is about $23, a little higher than Rosner’s mark.
Write to Al Root at [email protected]
