Bank of America (BoA) reinstated coverage of Fisker Inc. (NYSE:FSR) with a Buy rating and set a 12-month price target of $8.00 on the automotive stock. According to BofA analysts, Fisker is poised for robust growth, driven by significant trends within the automotive industry and the recovery of the global auto sector. Nonetheless, the competitive landscape is intense, and the ability of companies like Fisker to maintain their technological superiority and offer compelling products will be pivotal for their long-term success.
Fisker is well-prepared from both a product and manufacturing perspective. Their inaugural production vehicle, the Ocean CUV, is an appealing and captivating product that has already generated significant interest among consumers, as evidenced by approximately 60,000 reservations received to date. While BoA’s confidence in the PEAR small CUV, scheduled for launch in 2025, is somewhat lower, both this vehicle and the Alaska pickup truck (also anticipated to debut in 2025) cater to large market segments and, if priced appropriately, have the potential to achieve relatively high sales volumes.
Fisker is expected to experience a notable upswing in revenue, earnings, and volume in 2024 as production of the Ocean CUV ramps up. While this development should not catch investors off guard, it could serve as a pivotal catalyst for the stock, especially given the company's previous delays in production targets due to supply chain challenges. Ultimately, the increased production volumes are anticipated to lead Fisker to EBITDA breakeven in 2024, with projected revenues approaching $3 billion, a significant rise from $1.2 billion in 2023 estimates and a mere $342,000 in 2022.
It is likely that Fisker will require more than $1 billion in additional capital beyond the $300 million obtained through the convertible notes offering in July 2023. BoA’s model reflects this need and assumes that gross proceeds will be raised through equity offerings to support the launch of the PEAR and Alaska vehicle models. Nevertheless, analysts anticipate that Fisker will achieve self-sustainability relatively swiftly, with forecasts indicating this milestone will occur in 2027 or 2028.
Shares of FSR are up 5.46% in pre-market trading Tuesday.