- January 23, 2021
- Posted by: Bastion team
- Category: Markets
- Deutsche Bank named its eight auto-industry stock picks for 2021 in a research note.
- Six could benefit from the rise of electric and autonomous vehicles.
- They are Tesla, GM, Luminar, Nio, Aptiv, and Visteon.
- Visit Business Insider’s homepage for more stories.
Automakers and tech companies have spent billions over the past decade preparing for a future dominated by electric cars and automated-driving technology.
When looking at the auto industry, investors should focus on how well companies are positioned to capitalize on those trends, according to Deutsche Bank analysts Emmanuel Rosner, Edison Yu, and Conor Walters, who shared their 2021 stock picks for the automotive industry in a January 20 research note.
“We expect Autos 2.0 (electrification, autonomy, and connectivity) to remain the most powerful investment trends again this year,” the analysts wrote.
Six of the eight companies included in the analysts’ 2021 picks have the potential to benefit from the shift to electric and increasingly automated vehicles, the analysts said. The analysts also picked two suppliers, Adient and Dana, that can make parts for electric or gas-powered vehicles and could benefit from improved demand for vehicles and additional fiscal stimulus measures.
These are Deutsche Bank’s automotive stock picks for 2021.
Stock ticker: GM
Deutsche Bank’s price target: $64
Why Deutsche Bank recommends it: “We continue to be very encouraged by GM’s aggressive EV strategy, which could ultimately give it a strong market position. Investors have shown increasing willingness to give the stock credit for robust EV technology and efforts, and we believe GM stock could further re-rate as the company demonstrates success in electrification and new ways to monetize it.”
Luminar Luminar’s Iris lidar sensor.
Stock ticker: LAZR
Deutsche Bank’s price target: $37
Why Deutsche Bank recommends it: After talking to two Luminar executives on January 7, Rosner and Yu wrote, “Luminar’s comments about its sensor cost trajectory were particularly encouraging, as management indicated its current bill of materials already is in the three-digit $ range per unit, and should comfortably get to $500 by 2023 based on signed volume-based supply agreements, and < $100 by mid-decade. With regards to its strategic partnerships and customer agreements, Luminar continues to progress well through sample B/C validation testing and believes it is well on track to convert numerous development programs to series OEM production awards over the next ~24 months. All in, we believe Luminar’s superior system performance at the right cost and deep relationships with automakers continue to justify our Buy rating and $37 price target.”
Tesla Tesla Cybertruck.
Stock ticker: TSLA
Deutsche Bank’s price target: $890
Why Deutsche Bank recommends it: “We believe that 2021 is shaping out to be a pivotal year for Tesla as it begins production at two new facilities and launches a number of new products in the lineup. To start, the company has already begun delivering made-in-China Model Y vehicles, and will ramp through 2021. Additionally, Tesla anticipates that it will complete the construction on both Berlin GF and Austin GF, with vehicle production beginning at both facilities in 2021. Mid-term, we believe Tesla’s impressive target trajectory for its technology, capacity, and especially cost could help accelerate the world’s shift to electric vehicles and extend Tesla’s EV lead considerably. We strongly believe that Tesla’s battery plan is a bold attempt to inflect down battery costs much faster than their current trajectory, which could give Tesla a large competitive advantage.”
Aptiv A self-driving vehicle powered by Aptiv technology.
Andrej Sokolow/picture alliance via Getty Images
Stock ticker: APTV
Deutsche Bank’s price target: $160
Why Deutsche Bank recommends it: “Continues to showcase its best-in-class automotive technology and moat with 70%+ win-rate in high-voltage awards, considerably above its 30% market share globally in power distribution. Management expects high-voltage sales to grow at 40% CAGR through 2022, leading to $1bn in revenue. Aptiv’s content per vehicle on BEV is >$1k or 2x typical low voltage vehicle, with over 50% wallet share at Tesla. Valuation-wise, we could see Aptiv re-rating based on an EV/Sales multiple which is still very low compared to other EV comps (our new price target assumes just 3.0x 2021E EV/sales).”
Nio Nio ES6.
Stock ticker: NIO
Deutsche Bank’s price target: $70
Why Deutsche Bank recommends it: “With expectations running high into the [January 9 Nio Day] event, we believe NIO provided customers and investors alike with a bold roadmap for the next two years including an impressive high-end flagship sedan, new 150 kWh solid-state battery pack, and very ambitious vision for autonomous driving (“NAD’) that will shift to a software subscription model…Overall, we think achieving all these targets will without a doubt be challenging but believe NIO is among the best positioned to do so.”
Visteon A ‘SmartCore’ dashboard at the technical center of Visteon in Germany.
Stock ticker: VC
Deutsche Bank’s price target: $166
Why Deutsche Bank recommends it: “First Battery Management System win with GM’s important Ultium EV platform validates its latest technology, unlocks a large new TAM for Visteon, and positions it well to benefit from the trend towards vehicle electrification, which could carry large positive implication for its stock’s valuation. GM’s accelerated launch schedule would boost Visteon growth ($350-500 CPV).”
Bastion Balance Seoul, Korea.