BofA Raises Price Target on Tesla (TSLA) and Ford (F), Cuts on GM (GM) and Rivian (RIVN)

April 6, 2022 7:59 AM EDT
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Bank of America analyst John Murphy has revisited the firm’s coverage of the automotive industry to reflect recent updates and trends.

As far as ratings are concerned, Murphy upgraded Aptiv (NYSE: APTV) and Lear (NYSE: LEA) to Buy from Neutral, while Adient (NYSE: ADNT) and Visteon (NASDAQ: VC) are upgraded to Neutral from Underperform on valuation.

On the other hand, Murphy downgraded America's Car-Mart (NASDAQ: CRMT) to Underperform from Buy, CarMax (NYSE: CMX) to Neutral from Buy and Avis Budget (NASDAQ: CAR) to Underperform from Neutral on elevated valuation.

“Despite the cut to our volume forecasts (more significant in 2022E, but also modest for 2023-2025E), we continue to believe that the near-term volume pressure is setting up for a more robust capital goods replacement cycle over the mid/long-term. Additionally, our assessment of stock cycle timing (stocks peak/trough 12-18 months before volume peak/trough) remains favorable. More specifically, our anticipated peak around 2025 should set up for a broad-based constructive trade on the group to persist into 2022- 2023, although we expect stocks may remain volatile over the next few months,” Murphy explained in a client note.

On carmakers, Murphy raised price targets on Tesla (NASDAQ: TSLA) to $1,300.00 per share from the prior $1,100.00 and Ford (NYSE: F) to $32.00 from $30.00 to reflect updated estimates.

Conversely, the analyst slashed price targets on General Motors (NYSE: GM) to $95.00 from $100.00, Fisker (NYSE: FSR) to $18.00 from $23.00, Canoo (NASDAQ: GOEV) to $4.00 from $5.00, Lordstown Motors (NASDAQ: RIDE) to $3.00 from $4.00, and Rivian (NASDAQ: RIVN) to $100.00 from $140.00.

“Our estimates now reflect a new US/NA trough in 2022, re-basing and then recovering back to a peak in the 17- 18mm unit range in the mid-2020s, as well as pressure in the EU and APAC markets through 2022, with recovery thereafter. What is not encompassed into our forecasts at present is whether ongoing supply chain constraints reverberate into demand destruction, which would be a material negative. At this point, we believe many financial outlooks provided by companies at 4Q:21 reporting in January are now too optimistic in light of incremental deterioration in production/supply trends over the past month; however, we would note that most outlooks were back-end loaded for recovery in 2H:22,” the analyst added.

By Senad Karaahmetovic

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Tesla, BofA/Merrill Lynch, Senad Karaahmetovic