EV startup Fisker (FSR) got a big nod from Wall Street, with a hefty price target from Morgan Stanley. FSR stock skyrocketed.
Morgan Stanley resumed coverage of the Manhattan Beach, Calif.-based company with an overweight rating and a $40 price target. Analyst Adam Jonas said two factors are contributing to his rosy outlook: the likelihood of an on-time launch of its all-electric Ocean SUV as demand for EVs exceeds supply and its manufacturing strategy.
Fisker plans to start production of the Ocean on Nov. 17, 2022.
“We believe FSR may be one of the only EV-related startups to actually launch on time and ramp efficaciously in late 2022,” Jonas wrote in the Aug. 9 note to clients.
Jonas also addressed criticism that Fisker outsources too much to its suppliers. Fisker and Magna International (MGA) in June signed a long-term manufacturing agreement that extends and finalizes a deal, which began in October 2020, through 2029.
The agreement covers all critical planning and launch phases of the Ocean, which will be made at Magna’s plant in Graz, Austria.
The Ocean will use a version of a Magna-developed electric vehicle architecture modified by Fisker to create the FM29 platform. The Ocean will debut at the Los Angeles Auto Show in November 2021, and have a starting price of $37,499.
In addition, Fisker is partnering with Apple (AAPL) supplier Foxconn to make a second production model. It will have a starting price of less than $30,000, before incentives. Production is expected to begin in the fourth quarter of 2023.
“While we agree that the big winners in the global EV arms race may be the vertically integrated platform players, there is room for other strategies,” he wrote.
Indeed, Jonas thinks Fisker’s strategy is what sets it apart from rivals. He considers Fisker “an EV design/engineering lab and consumer experience architect” and as an “accelerator for manufacturing powerhouses who need to get product into market as quickly and successfully as possible.”
However, Morgan Stanley also lowered fiscal 2022 and 2023 delivery estimates for the Ocean to 4,000 and 45,000, respectively. It had previously forecast FY22 and FY23 unit deliveries of 8,000 and 51,000, respectively.
Magna stock rose 2.8%. Shares of the big auto parts maker found support at their 200-day line last week.
Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.
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