Wall Street’s favorite games for 2023
Electric vehicle stocks are looking good this year. Along with Tesla’s comeback after a dismal 2022, names like ChargePoint Holdings and Rivian Automotive have also rallied. The iShares Self-Driving EV and Tech ETF, which is down nearly 38% over the past year, is up 23% so far in 2023. The IDRV YTD Mountain iShares Self-Driving EV and Tech ETF is up 23% so far this year in electric vehicles thanks to a price war instigated by Tesla. Earlier this year, CEO Elon Musk slashed the price of its new electric vehicles by up to 20% in the U.S., although Tesla recently hiked the prices of its Model Y models by 2% to 3%. Prices also fell in Europe and China. “There’s just a huge number of people who want to buy a Tesla car but can’t afford it. So these price changes really make a difference to the average consumer,” Musk said in a conference call Jan. 26 following the automaker’s fourth-quarter earnings report. He also said that Tesla has seen its best-ever order-busting year. Shortly after Tesla’s price cuts, Ford hit back by lowering the cost of its Mustang Mach-E. General Motors is sitting out the price war as it is. Rivian isn’t cutting prices yet either, but recently announced it was laying off 6% of its workforce to save money. According to Edmunds, demand for electric vehicles is expected to increase from the 5% of all vehicles sold in the US last year. That was almost twice as much as in the previous year. Goldman Sachs is also optimistic about the future of electric vehicles and the companies involved. “We anticipate technological innovation and see significant growth in the EV ecosystem through 2030 and believe auto industry profit pools will transform,” Goldman analysts wrote in a report last week. With this in mind, CNBC Pro looked for electric vehicle industry stocks, which are popular with analysts and have a majority Buy rating, according to FactSet. Analysts’ average price target calls for a gain of at least 10% over the next 12 months per FactSet. Here’s a list of those names: Innoviz Technologies, which makes sensors for autonomous driving systems, is the most popular with analysts. About 83% of the six analysts covering the stock rate it as a Buy. It also has an upside potential of 82% versus the average analyst price target. The Israeli company, which announced in August that it had won a deal to supply sensors and associated software to Volkswagen, is up almost 33% year-to-date. ChargePoint Holdings is also a big favorite among analysts, with 70% of those covering the stock giving the stock a Buy rating. The manufacturer of charging stations for electric vehicles has been recognized as the best idea for 2023 by both Cowen and JPMorgan. While ChargePoint’s stock has lost 50% over the past year, it’s up more than 30% so far in 2023 and has another 70% gain over analysts’ average price target. Rivian Automotive has a whopping 90% upside potential from analysts’ average price target. The EV maker is up 8% so far this year after plummeting 82% in 2022. Around 54% of the analysts covering the stock rate it as a Buy. When Rivian announced layoffs last week, CEO RJ Scaringe wrote in an email to employees that improving the company’s operational efficiencies must be a core goal. Rivian is focused on ramping up production of its R1 trucks and the vans it builds for Amazon. It is also developing its upcoming, smaller R2 vehicle platform. Additionally, General Motors has nearly 15% upside from analysts’ average price target, with 54% of analysts rating the Cadillac-maker a Buy. The Detroit-based automaker recently beat Wall Street expectations for fourth-quarter earnings and sales. In a letter to investors, CEO Mary Barra described 2023 as a “breakthrough year” for the company’s EV business. It also confirmed plans to produce 400,000 electric vehicles in North America between 2022 and the first half of next year. One name notably missing from the list is Tesla. While a majority of analysts covering the stock are in a Buy view, the average target price implies a downside potential of 1%. – CNBC’s Michael Bloom, Carmen Reinicke and John Rosevear contributed coverage.
https://www.cnbc.com/2023/02/08/wall-streets-favorite-ev-plays-.html Wall Street’s favorite games for 2023