Buy electric vehicle maker Fisker as demand skyrockets, Needham says

Published Thu, Sep 15 20228:30 AM EDT

Soaring demand for electric vehicles could benefit a slew of electric vehicle stocks going forward —especially shares of Fisker, Needham said. Amid mounting EV adoption, the firm initiated coverage of Fisker with a buy rating, citing growing demand for SUVs. Needham also upgraded shares of Tesla to a hold from an underperform rating and initiated Rivian Automotive and Lucid with hold and underperform ratings, respectively. "Our key takeaway is that the growth forecasts for EVs still appear conservative after several revisions by agencies mentioned in this report," wrote Vikram Bagri a note to clients. "The individual OEM targets, government mandates for banning internal combustion engine (ICE) vehicles around the world, and capital being invested in the space all point to stronger growth in EV adoption." Although Fisker is down more than 41% this year, it's the firm's most preferred stock within its EV coverage. Bagri believes shares are attractive given the company's business strategy and the growing popularity of SUVs — which Fisker specializes in. "Furthermore, the popularity of SUVs could make our estimates for FSR too conservative, as SUVs account for ~45% and > 50% of total car sales in the EU and the US respectively," Bagri said. "If these ratios are sustained, then ~10mm vehicles sold in the US and the EU in 2030 should be EV SUVs, which would put FSR's share at ~5% of the EV SUV market." While Needham upgraded shares of Tesla to hold, Bagri noted that the company is losing its dominance in China and has lost some market share to original equipment manufacturers. Shares are down about 14% this year. In launching coverage of Lucid with an underperform rating, Bagri cited the company's premium valuation and potential manufacturing issues ahead. "We believe software development and manufacturing ramp could hit more snags due to high profile departures from the company," he said. "Finally, LCID is the company that requires most outside capital in this group." Lucid shares have plummeted more than 56% this the year kicked off and sit more than 71% off their 52-week high. — CNBC's Michael Bloom contributed reporting