QuantumScape (QS) Given Lackluster Rating at JP Morgan, But Analyst Still Sees Nearly 50% Upside

July 21, 2021 11:43 AM EDT
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Price: $21.34 +3.54%

Rating Summary:
    2 Buy, 4 Hold, 1 Sell

Rating Trend: Up Up

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JP Morgan announced on Wednesday that they initiated coverage on QuantumScape (NYSE: QS), a solid-state lithium-ion battery development company backed by Volkswagen Group. Analyst, Jose Asumendi, gave the company a Neutral rating and a $35 price target.

The rating reflects "risks associated with successfully developing a commercially viable solid-state battery cell against the upside of QuantumScape potentially disrupting the electric battery market and accelerating mass adoption of electric vehicles," Asumendi commented.

QuantumScape has developed solid-state lithium-metal battery technology. This new technology hopes to replace the polymer separator used in conventional batteries with a solid-state ceramic separator, enabling the carbon or carbon-silicon anode used in these cells to be replaced with an anode of pure metallic lithium.

QS presented data that shows single-layer cells which can cycle more than 1,000 cycles and retain over 90% of their initial energy when cycling at aggressive 1C rates of power. QS also presented data showing multilayer cells cycling to close to 800 cycles with similar capacity retention.

The analyst notes QuantumScape enjoys a strong net cash position to develop its battery prototypes and win new orders during 2021-2023. Post 2024, if QS is successful in developing the battery prototypes for Volkswagen this could trigger the expansion of the VW-QS JV into QS1 battery production line as well as potential orders from other manufacturers.

QuantumScape is 2.5% higher on the day amid a strong rally in EV names.

By Michael Elkins | Michael.Elkins@streetinsider.com

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