Microvast Holdings (MVST)
We’ll start with Microvast Holdings, a leader in lithium-ion battery tech. The company’s advanced battery solutions are designed to power a wide range of electric vehicles, from small passenger cars to heavy-duty trucks and buses. Additionally, the company offers a comprehensive suite of services to support its customers, including battery system design and integration, testing and validation, and after-sales support. The firm also has a global reach, with
manufacturing operations in China, as well as facilities in Germany and the U.S.
The company will report Q1 earnings today after the close, but we can hark back to the Q4 and full-year 2022 report to get a picture of Microvast’s operations. In the quarter, revenue fell by 3% year-over-year to $64.8 million, although it should be noted that for the full-year, revenue reached $204.5 million, a 35% improvement on the $152 million generated in 2021. In Q4, the company delivered a non-GAAP adjusted net loss of $15.9 million, also bettering the loss of $33.4 million in the same period a year ago.
Nevertheless, loss making firms have been out of favor in the high inflation and rising interest rate environment and that has been reflected in the stock’s poor performance; the shares have shed 66% over the past year. However, they are now at such a low level that H.C. Wainwright analyst Amit Dayal believes they present a
“compelling entry point.”
In the year ahead, the 5-star analyst thinks the stock should outperform its peers. This forecast is supported by: “(1) accelerating sales that should push margins to improve from 4.4% currently to 18.4% during the next two years; (2) a healthy balance sheet with $327.7M in cash that should be sufficient to cover planned capacity expansion and growth investment needs over the next 12-18 months; (3) capacity expansion plan in the U.S. and China, when fully utilized is expected to translate into an additional revenue potential of $1B; (4) solid manufacturing and distribution presence established in the U.S., allowing the company to benefit from grants and incentives stipulated under the IRA; (5) a relatively unique business model that allows for flexibility in meeting supply chain challenges better than some of its competitors; (6) a very healthy backlog of $410.5M…; and (7) significant industry runway with multi-billion addressable opportunities associated with the electrification trend.”
That’s a long list that forms the basis of Dayal’s Buy rating on MVST. With shares trading at
$1.19, the top analyst gives the stock
an $8 price target, implying
a huge 572%.
Microvast seems to have slipped under most analysts’ radar; the stock’s Moderate Buy consensus is based on just two recent ratings – but both are Buys. Currently, Microvast shares trade at $1.14, while the average price target is $8, practically the same as Dayal’s
