VinFast Auto
stock has a new bull.
BTIG analyst Greg Lewis launched coverage of the Vietnamese electric- vehicle start-up on Wednesday with a Buy rating and a target of $10 for the share price.
That $10 is the same price that management used to value the EV maker in a merger with a special-purpose acquisition company that closed in August.
He sees the company breaking even in terms of earnings before interest, taxes, depreciation, and amortization by 2026 as sales grow from roughly $1.3 billion in 2023 to about $7 billion. That growth and eventual profitability make VinFast a winner, as Lewis sees it.
The company will need more capital between now and 2026. Lewis sees VinFast using about $4.4 billion building its business in 2024 and 2025 combined, while he expects it went through about $3.2 billion in 2023.
All that is funding VinFast’s global expansion. The company broke ground on an auto plant in North Carolina in July. VinFast delivered more than 10,000 battery electric vehicles globally in the third quarter, up from fewer than 200 in the third quarter of 2022.
The bullish call isn’t helping yet. VinFast stock was down 1% in early trading at $6.98 a share, while the
S&P 500
and
Nasdaq Composite
were down 0.6% and 0.9%, respectively.
VinFast stock dropped almost 16% on Tuesday, the first trading day of the new year, as investors sold shares of many EV start-ups. It seemed to be a case of taking profits.
Rivian Automotive
stock dropped more than 10% on Tuesday after the company reported solid production numbers. It was a steep drop, but shares were up more than 30% over the month coming into the report
VinFast stock has been exceptionally volatile since the company raised money in the SPAC deal. Shares have moved an average of about 11%, up or down, daily since the merger. Volatility has come down a little, but shares have still moved an average of 4% a day for the past month.
The SPAC merger valued VinFast stock at about $23 billion, which is what Lewis sees as a fair price. It works out to about six times his estimate for 2025 sales.
VinFast shares traded as high as $93 in a postmerger frenzy that valued the stock at more than $210 billion, but they have also gone as low as $4.59. That valued the company at less than $11 billion.
More Wall Street analysts picking up coverage should help tamp down volatility even more. Four analysts cover the stock now. All four rate shares at Buy, while the average price target among them is $10, with a range of $7 to $12.
Four is still only a few. Rivian, which has a market capitalization of about $20 billion, has 27 analysts covering the stock, according to FactSet.
Corrections & Amplifications: Rivian Automotive stock dropped more than 10% on Tuesday. An earlier version of this article incorrectly said the decline was on Wednesday.
Write to Al Root at allen.root@dowjones.com
Read the full article here
