Written by Cláudio Afonso | LinkedIn | X
Polestar, the electric vehicle brand owned by Geely, is nearing a pivotal moment in its sales growth and showing progress in improving its earnings, Bank of America Securities analyst John Babcock wrote in a research note on Thursday. However, Babcock warned that achieving sustainably positive free cash flow is still a long way off.
“We initiate coverage of PSNY at Neutral with a $1.25 PO, implying potential upside of ~20%. PSNY offers pure-play exposure to the growing EV market, is nearing an inflection point in sales volumes, and is improving its earnings profile.
Polestar shares fell about 1% on Wednesday, closing at $1.05—hovering just above Nasdaq’s minimum listing requirement of $1. In the new note, the analyst warned that the EV brand faces risks from its parent brand, Geely.
“However, it faces risks from its Chinese ownership and potential changes to US trade and subsidy policies. Furthermore, sustainably positive FCF [free cash flow] is far from imminent,” John Babcock wrote.
The analyst explained the rationale behind the firm’s price objective (PO) for Polestar. “Our PO is based on an average of our DCF and EV/Sales valuations. The 1.3x EV/Sales multiple we use is a discount to TSLA’s early trading multiples and those we use for EV peers including LCID (at 5x) and RIVN (at 2x), which we think is warranted given differences in business models and stage of maturation.”
Also this Thursday, BofA Securities raised the price target by $50 on Tesla to $400.
The well-known tech YouTuber Marques Brownlee (MKBHD) published recently a review of the model, praising (part of) its design and audio system while criticizing usability and the battery range.
Written by Cláudio Afonso | LinkedIn | X
