Fisker’s Ocean electric SUV.
Bridget Bennett/Bloomberg
Stock in electric-vehicle maker Fisker about doubled over the past week. Stock moves like that might generate caution from Wall Street, but one analyst feels better about Fisker’s prospects, despite the huge move.
Wednesday, Wolfe Research analyst Rod Lache upgraded Fisker (ticker: FSR) stock to Hold from Sell. His price target jumped to $30 from $21. An upgrade to Hold isn’t a ringing endorsement, but it’s noteworthy given the recent move in shares.
Lache believes the deal with Foxconn to jointly develop an all-new EV model due in 2023 is narrative changing. While noting that “execution risk” remains, he thinks having a partner like Foxconn is a positive for the fledgling EV maker.
His peers seem to agree. About 63% of analysts covering the EV startup rate Fisker stock at Buy. The average Buy-rating ratio for stocks in the Dow Jones Industrial Average is about 57%. Still, the average analyst price target is only $26, lower than recent trading levels. Analysts have trouble keeping up.
However, not everyone is as upbeat on Fisker’s strategy to remain asset-light, and have a partner to actually assemble cars. Lucid CEO Peter Rawlinson believes car companies need to own their own capacity. “Someone has to own the assets,” Rawlinson tells Barron’s. And he thinks the entity that owns the assets is the one that has the most opportunity for profit.
In addition to the Foxconn plan, Fisker is using Magna International (MGA) to assemble the Ocean all electric SUV. Lucid, for its part, is building its own facility in Arizona. Lucid is a Fisker competitor, but Lucid’s first model is higher-price, luxury sedan closer to a Tesla (TSLA) Model S. The Ocean, Fisker’s first model, is more like a Tesla Model Y, a lower-priced SUV.
Lache doesn’t appear to mind the asset-light strategy. Rawlinson does. The market, frankly, isn’t sure what to make of the competing models.
Fisker stock has rocketed higher following its Foxconn announcement. Fisker’s market capitalization is more than $8 billion, up almost $4 billion over the past few days. Lucid, however, is worth more than $44 billion based on the 1.6 billion shares that will be outstanding after its special-purpose acquisition company, or SPAC, merger closes.
The market is excited by both companies. Lucid has the upper hand in total value, but Fisker stock has done better over the past week.
Fisker stock is down 5% in Wednesday morning trading. The S&P 500 is down 0.3%. The Dow Jones is up 0.3%. It’s tough to blame the upgrade for the stock drop. Fisker stock is still up 38% over the past two weeks.
Write to Al Root at [email protected]
