Morgan Stanley Expands EV Coverage; Initiates Li-Cycle (LICY) at Overweight, Sees 85% Upside
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Morgan Stanley expanded their EV coverage to include Li-Cycle Holdings Corp. (NYSE: LICY) and initiated coverage of the company with an Overweight rating as well as a $15 price target. With LICY’s ability to process any battery regardless of chemistry, form factor, or size, as well as their aims to address the growing issue of lithium-ion battery disposal with a closed-loop supply chain, Morgan Stanley analyst Adam Jonas believes that the company is well-positioned to benefit from the megatrend of EV adoption.
After surveying the EV de-SPAC landscape to go deeper into the end markets and technologies, Jonas believes that Li-Cycle offers the most compelling strategy and a favorable risk-reward skew. The company’s BEV battery recycling market is especially attractive, as it “helps to mitigate important environmental externalities associated with the EV ecosystem”.
Jonas sees EV battery recycling’s potential as a very large market with recurring revenues. The market should see significant government support, given the environmental externalities and national security implications of sourcing materials. Despite risks related to scaling competition, Jonas finds LICY’s value proposition “compelling”.
The $15 price target offers 85% upside from Monday's close.
By Michael Elkins | Michael.Elkins@streetinsider.com
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