Cantor Fitzgerald Affirms Overweight Rating on Polestar, Price Target Raised to $3

Cantor Fitzgerald Affirms Overweight Rating on Polestar, Price Target Raised to $3

The financial landscape for electric vehicle (EV) manufacturers is constantly evolving, and one company that continues to garner attention is Polestar, Geely's premium EV brand. Cantor Fitzgerald, a leading financial services firm, recently reiterated its bullish stance on Polestar, maintaining an overweight rating and raising the price target to $3.

According to Andres Sheppard, a senior analyst at Cantor Fitzgerald, the company's financial results, which were released last week, did not deter his optimism. Despite reporting wider losses in 2023 compared to the previous year, the analyst remains confident in Polestar's growth potential. Sheppard's $5 price target and overweight rating are based on a discounted cash flow analysis, assuming an 11% weighted average cost of capital and a 2% long-term growth rate.

Polestar's recent financial results revealed a decline in revenue to $2.377 billion in 2023, down 3% from the previous year. However, the company reported a net loss of $414.7 million last year, which was a significant change from a profit of $98.4 million in 2022. The gross margin was negative at -17.4% compared to positive 4.0% in the year before, primarily due to non-cash impairment charges related to Polestar 2 assets and inventory impairment.

Despite these challenges, Polestar has made strides in its business, delivering the first units of the Polestar 3 at its headquarters in Gothenburg, Sweden, and introducing a new entry-level variant for the SUV with the launch of a Long Range Single Motor variant. The company also refreshed its Polestar 2 model, featuring design updates, a revamped pack structure, increased range, and more individual options.

However, the road ahead is not without its challenges. Sheppard highlighted several key risks that could impact Polestar's performance, including continued supply-chain disruptions, manufacturing constraints, high cost of goods sold, a highly competitive market, and slower-than-expected customer adoption.

Despite these risks, Cantor Fitzgerald remains optimistic about Polestar's prospects. The company's commitment to innovation, coupled with its growing market presence, positions it well for success in the competitive EV market.

Sources:

[1] Cláudio Afonso. (2023, September 10). Cantor Fitzgerald reiterates Polestar's price target ahead of Q1 earnings results. Electric Vehicles. https://eletric-vehicles.com/geely/polestar/cantor-fitzgerald-reiterates-polestars-price-target-ahead-of-q1-earnings-results/

[2] AINvest. (2023, September 13). Polestar A: Cantor Fitzgerald reiterates Overweight rating, target price is $3. AINvest. https://www.ainvest.com/news/polestar-a-cantor-fitzgerald-reiterates-overweight-rating-target-price-is-3-24091000d03e9f76c473b6e3/