Tesla (NASDAQ: TSLA)
Wedbush is maintaining its bullish view on Tesla, despite negative headlines regarding an autopilot software recall in China.
“We believe this situation overall is a bump in the road and does not derail the near-term or long-term bull thesis for Tesla China, but going forward it needs to be a smoother road on autopilot safety or the PR black cloud will continue,” Wedbush analyst Daniel Ives wrote in a note published on Sunday.
According to Ives, the recall is a “moment of truth for Tesla,” as the company needs to fix the autopilot software issues and put them “in the rearview mirror.”
Wedbush maintains its outperform rating on the stock of electric vehicles. In addition, the firm maintains its $1,000 price target on Tesla, implying a 48.8 percent upside.
According to Ives, the Chinese market will account for 40% of Tesla’s global deliveries by next year. As a result, China’s demand is a “key driver” of Tesla’s long-term growth.
“The company must play nice in the sandbox with Beijing on safety issues, or it will be an impediment to achieving its goals/targets in the country,” Ives said.
Tesla shares closed at $671.87 on Friday, down 4.8 percent year to date in 2021.
Infrastructure could accelerate the electric vehicle takeover
Analysts led by David Kelley expect the U.S. charging station market to grow at a rate of more than 30 percent per year until 2030, noting that “to avoid the highway to hell, EV infrastructure build-out is critical to the electrified future.”
Indeed, the company stated that there are currently 84,000 Level 2 charging stations and 18,000 DC Fast Charging stations in the United States, which they expect to increase to one million by 2030 and more than 2.4 million by 2035.
To that end, Jefferies initiated coverage on ChargePoint with a buy rating, stating that the company’s position as a leader in the space should result in further gains in the future.
“We expect CHPT to leverage scale and integrated hardware, software, and services features to drive +57 percent sales CAGR [compound annual growth rate],” the firm wrote in a client note.
“We expect charging infrastructure to become a heightened government focus point globally, given increasing demand for clean energy and electrification to combat climate change,” the firm said. President Joe Biden’s initial infrastructure bill included $174 billion for spending on electric vehicles; however, the most recent proposal only includes $15 billion in spending. Nonetheless, the initiative signals the administration’s stance on encouraging greater adoption.
ChargePoint is a vertically integrated pure-play EV charging brand that sells charging hardware to customers and then turns that revenue into recurring revenue via a cloud-based software support system. Customers include Facebook, Whole Foods, and FedEx.
In September, the company, which was founded in 2007, announced its intention to go public through a reverse merger with special purpose acquisition company Switchback Energy Acquisition Corporation. The transaction was completed on February 26th.
“Europe and fleet expansion provide significant greenfield growth opportunities outside of core commercial volumes…as CHPT aims to leverage core hardware, software, and services integration, as well as tech expertise,” Kelley said. He also cited the company’s asset-light model — it does not own the charging infrastructure — as fueling future growth.
Jefferies has a $40 price target on the stock, which is 26% higher than where it closed on Friday.
Since the merger was completed at the end of February, the stock has gained 3%.