Credit: Fisker

Morgan Stanley lowers Fisker’s PT saying the near future will be crucial

Written by Cláudio Afonso | | LinkedIn | Twitter

Morgan Stanley analyst Adam Jonas lowered the firm’s price target on Fisker shares from $15 to $10 while downgrading the rating from Overweight to Equalweight. The downgrades comes after Fisker’s earnings results reported earlier this week.

Jonas said the EV maker is “in a situation where access to capital in the next 6 months would be highly deterministic to the company’s fundamental performance” estimating the need to raise between $0.5 billion and $1 billion by early 2023.

“We covered largely in-line results and a reiterated start of production (SOP) and cash burn guide in our reaction note. In this note we update our earnings forecasts and price target to reflect the need for substantial outside capital (we estimate between $500mm and $1bn by early next year) in order to fund the ramp of the Ocean, as well as development/capex related to other products we have given Fisker credit for in our forecasts,” the analyst said.

In addition, the analyst warned to the continuing macro and geopolitical risk including European gas shortage risk elevating the near term execution risk considering Fisker‘s vehicles will be produced in Gratz, Austria.

“While the supply chain situation may be improving, and the company may be benefiting from easing material costs and a weak Euro, we believe the company is in the situation where access to capital in the next 6 months would be highly deterministic to the company’s fundamental performance. Continuing macro and geopolitical risk, compounded by European gas shortage risk (100% of Fisker’s production is in Austria) elevates the near term execution risk”.

“As such, we now assume FSR raises $1bn in 4Q22 at the current share price of $10/share compared to a $1.5bn debt raise in FY23 that we modeled previously, creating substantial dilution. This, coupled with a more modest outlook for volume through 2030, reduces our price target to $10 (vs. $15 previously) and rating to EW vs. OW previously.”

On Wednesday, Fisker reported its second quarter earnings results where it confirmed the sold-out of the 5,000 units special units for the Ocean model amid a non-refundable $5,000 reservation.

The company said it has over $850 million of cash and cash equivalents reflecting its “prudent liquidity management and is sufficient to fund the production launch of the Fisker Ocean in November 2022 and for additional vehicle development throughout 2022”.

“We are delighted to announce that the 5,000 limited edition Fisker Ocean One pre-order units are completely sold out, thanks to pioneering customers in all nine launch markets: Austria, Canada, Denmark, France, Germany, Norway, Sweden, United Kingdom, and the United States,” Henrik Fisker, Fisker CEO stated.

On Monday, Fisker CEO unveiled that the upcoming Ocean Model will bring streaming apps like Youtube, Disney+, and Amazon Prime Video but also the web browser Google Chrome.

Last week, the company said the model will be showcased on Pebble Beach Automotive Week at Pebble Beach Concours d’Elegance from August 18 — 21. The pure electric SUV model made its European public debut in late February at Mobile World Congress in Barcelona (Spain) and starts at $37,499 for the Sport trim version.

Earlier in the week, the Ocean model arrived in Los Angeles to start the road tests ahead of the mass production and the first deliveries scheduled for November in Graz, Austria.

In late July, the company confirmed it will open its first Brand Experience Center in Europe this November. The center will be located in downtown Munich (Kaufingerstraße Street) near the Marienplatz, one of the touristy points in the German city.

Written by Cláudio Afonso | | LinkedIn | Twitter