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'Asset light' Fisker spends less -- and gets a buy rating

Analysts at Tudor Pickering Holt on Thursday started coverage of shares of Tesla Inc. and Fisker Inc., favoring newcomer Fisker with a buy rating.

Fisker's (FSR) risk-reward equation is "compelling," the analysts said, supported by "reasonable assumptions on production and sales."

Fisker's strategy of partnering with other makers to build its cars make it "asset light" and more likely to meet production deadlines and spend less money than traditional auto makers, they said.

The analysts started Fisker's stock at a buy rating and a $19 price target, which represents an upside of more than 35% over Thursday's stock price.

Fisker has contracted with auto parts, electronics and other makers, a strategy some on the Street have dubbed a bid to become the "Apple of autos," focusing on vehicle design and consumer interfaces

It announced a deal with electronics powerhouse Foxconn Technology Group in February, which makes several Apple Inc. $(AAPL)$ products, and it has an agreement with auto parts maker Magna International Inc. (MG.T), planning to have four vehicles in production by 2025, three with Magna and one with Foxconn. It aims to have the Fisker Ocean for sale late next year.

Tesla was another story, with the analysts rating the stock a sell and implementing a price target of $537. That represents a downside of around 30% from Thursday's stock price.

Tesla $(TSLA)$ "has done an amazing job of building a world-class business," the analysts said, but their sell rating was based on current valuation, uncertainty around the path forward to higher level of autonomous driving, and growing global EV competition that may hurt longer-term sales forecasts.

"In order to justify the current stock price, we'd need to see much more robust sales," or about 8 million units by 2030, they said. FactSet consensus on Tesla sales for this year hover around 800,000 units.

In the near-term, however, there are positives for Tesla, the Tudor Pickering Holt analysts said.

"For 2022, we foresee another robust year of delivery growth as both Austin and Berlin (factories) ramp capacity of the Model Y with our total deliveries reaching (1.24 million) units vs. consensus at (1.17 million) units," the analysts said.

So far this year, shares of Tesla have gained 6.5%, while Fisker shares have declined 1.6%. Their performances compare with an advance of around 19% for the S&P 500 index.