From General Motors to Toyota: Credit Suisse has 14 high-tech auto stock picks

Published Tue, Oct 26 202110:30 PM EDT

Analysts at Credit Suisse have named the auto stocks they expect to benefit from the "era of next-generation mobility" — think robotaxis, car sharing and autonomous vehicles. Their picks include some of the some of the biggest automakers in the world, as well as a few under-the-radar names. In the future , the Swiss bank noted that automakers are likely to transition to a recurring revenue model — similar to that used by many internet and tech companies – called MaaS, or mobility as a service. "We see significant potential for growth from next-generation mobility businesses centered on MaaS, which carry people and goods and provide services," the analysts led by Masahiro Akita said in an Oct. 18 research note. "We believe that automakers' future will hinge on whether or not they are able to come up with solutions that meet demand in this market." Trends the bank highlighted include the commercialization of robotaxis ("starting to look more realistic"), car sharing (it expects the market to hit 29 trillion Japanese yen ($253 billion) in 2030), and autonomous vehicles (which it expects to make up 76% of all vehicle sales by 2030). Stock picks The bank's global auto team recommended 14 outperform-rated stocks for their exposure to the next generation of mobility. The analysts give Toyota , the world's largest automaker by volume, an estimated 28% potential upside to its 12-month price target. Credit Suisse noted that the company is accelerating its transition from traditional automaker to mobility company, while strengthening its relationship with companies along the value chain. Toyota has also invested in companies to develop autonomous delivery vehicles, on-demand mobility services and data analysis services, the analysts noted. Shares in the company closed at 1,980 Japanese yen on Oct. 26. Honda is the Swiss bank's other pick in the Japanese automaker space. Honda's "improved product mix, capacity expansion in China and efforts to capture robust motorcycle demand" will position the company to deliver "sustained sales volume and earnings growth," the analysts noted. The bank puts the company's price target at 4,350 Japanese yen, up from around 3,400 on Oct. 26 — an implied potential upside of 28%. The bank likes Denso , a top supplier to Toyota, which it says has a wide-ranging portfolio that spans electrification, automation and information technology — the bank's core areas of next-generation mobility technology. The analysts are positive on the company's medium to long-term growth. Credit Suisse has a price target of 9,500 Japanese yen on the stock, which closed at 8,080 Japanese yen on Oct. 26. Credit Suisse also picked optical devices company Hamamatsu Photonics . GM, Hyundai and more General Motors , which wants to take on Tesla as the U.S. leader in EVs by transitioning to all-electric vehicles and grow its new software-and data-focused operations, also made Credit Suisse's list. The company received California's first-ever permit for robotaxis and will begin operating self-driving taxis in Dubai in 2023. It also announced plans to develop robotaxis in Japan in partnership with its subsidiary Cruise, alongside Honda. The Swiss bank's price target of $75 represents a 29% potential upside to its closing price of around $58 on Oct. 25. Ireland-headquartered Aptiv , a developer of smart automotive software and systems and a key supplier to Tesla, is another name favored by Credit Suisse to play the next-generation mobility trend. The analysts expect the company to generate strong long-term growth as its revenue streams shift to high-tech active safety, autonomous mobility, and advanced vehicle architecture. Credit Suisse has a price target of $181 on the company. It closed at $170 on Oct. 25. The last U.S. pick for the bank was California-based autonomous trucking company TuSimple . The analysts are bullish on South Korean automotive giant Hyundai Motor 's growth in sports utility vehicle sales, and expect rising sales to contribute to operating profit turnaround. Earnings contribution from the U.S. will also turn positive, the analysts added. They also expect Hyundai subsidiary Kia Motors to outperform in the next 12 months. The Swiss bank's price targets for Hyundai and Kia imply an upside potential of 31% and 42% respectively, based on the stocks' closing prices on Oct. 26. Chinese automaker Li Auto is another of Credit Suisse's stock selections for its "strong commitment and clear roadmap for autonomous driving," while the analysts like Chinese electric vehicle manufacturer Nio for its growth prospects as a "well-established premium smart electric vehicle maker with leadership in smart EV technology" in China. The bank has a price target of $45 on Li Auto, which closed at around $34 on Oct. 25. Nio has an estimated 50% potential upside to Credit Suisse's price target of $80. The bank's final stock picks were Chinese EV company Xpeng , China's largest SUV and pickup manufacturer, Great Wall Motor , and Indian automaker Maruti Suzuki India .

Toyota cars are offered for sale at a car dealership on December 22, 2008 in Wiesbaden, Germany.

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