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Polestar Automotive Holding UK PLC (NASDAQ:PSNY) tracked higher in Wednesday morning trading after Piper Sandler started off coverage on the electric vehicle stock with an Overweight rating.
Analyst Alexander Potter noted Polestar (PSNY) is under pressure amid a valuation reset with EV startups, but thinks the company warrants special consideration.
"Two newly-launched SUVs should fuel growth in 2024/2025, and an alignment with Volvo/Geely should boost ROIC while reducing scale-up risk," he noted. Potter conceded that Polestar's (PSNY) need for more capital will be an overhang. However, he also reminded that Polestar (PSNY) stands apart from others in the electric vehicle sector with a respectable track record of sales, patient strategic shareholders, global reach, and a believable path to breakeven. Looking ahead, Piper Sandler think Polestar (PSNY) can eventually sell more than 325K units per year, with 11% operating margins.
Piper Sandler set a price target on PSNY of 43, based on a discounted cash flow method.
Shares of Polestar (PSNY) rallied 2.50% on Wednesday to $2.06 after hitting an all-time low of $1.98 early in the day.
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