By Michael Elkins
Truist Securities initiated coverage of TuSimple Holdings (NASDAQ:TSP) with a Buy rating and $12.00 price target. Truist believes that the autonomous trucking company has established itself as a leader in the emerging Autonomous Trucking space both in its technology and in defining a practical commercialization strategy to penetrate the $800bn U.S. truck freight market.
A Truist analyst wrote, "While recognizing that growth remains out of favor in today's market, we believe TSP's current valuation fails to reflect the company's massive TAM opportunity, blue-chip partnership network, and progress toward commercialization. We also see a potential China divestiture as a near-term catalyst with meaningful organizational and cost benefits.”
TuSimple is the first autonomous trucking company to IPO, as well as the first to build out an autonomous freight network (AFN) and the first to conduct a 100% driver-less autonomous semi-truck run on public roads. Truist believes that the company will also be the first to achieve commercial scale in its autonomous operations and favors TSP's dual approach to commercialization as they see success in TSP's 3rd party carrier operations, driving fleet-owner demand for AV trucks, thus accelerating growth for the higher-margin carrier-owned AFN subscription segment.
Shares of TSP are down 0.37% in pre-market trading on Thursday.