By Michael Elkins
RBC Capital Markets downgraded Fisker Inc (NYSE:FSR) to Sector Perform (From Outperform) and cut the price target to $8.00 (From $13.00) as the company approaches SOP following the company’s 3Q report.
“We are moving to the sidelines seeing near-term execution risk and lower units in the outer-years as the product could be less competitive in the face of the Inflation Reduction Act.” Analysts wrote in a note. “The company is approaching SOP (Nov. 17th) and media reviews are likely in coming weeks. This could be a positive event, but post this, we see limited catalysts and high execution risk. All told, we see more balanced upside/downside now.”
The company indicated that demand and mix of the Ocean is strong, and that the electric vehicle company has already sold out of the US allotment of Sport and Ultra trim levels. Management also indicated that they have a plan to get to production of 42.4k in 2023. However, the analysts believe that the company faces execution challenges as management of the supply chain and software execution all seem high risk.
RBC Capital also believes that the electric vehicle maker will face tougher competition in the US given the benefits competitors may achieve from the Inflation Reduction Act. They also believe that more capital is needed as RBC’s model indicates the company will require an additional $2 billion on top of the $116 million the company raised from the ATM program in the 3Q.
After missing 3Q top-line estimates, Fisker management chose to maintain 2022 spending guidance, but pointed to the low-end of the range on efficient spending and FX.
Shares of FSR are down 8.4% in pre-market trading on Thursday.