What happened

Shares of electric-vehicle start-up Fisker (NYSE:FSR) were trading higher on Wednesday, after a Wall Street analyst initiated coverage of the company with a bullish note.

As of 11 a.m. EST, Fisker's shares were trading at $18.99, up about 18.9% from Tuesday's closing price.

So what

In a new note on Wednesday morning, Citi analyst Itay Michaeli initiated coverage of Fisker with a buy rating and a price target of $26. 

Michaeli wrote that Fisker is an "asset-light" premium electric-vehicle entrant that is on track to launch its first vehicle, the Fisker Ocean SUV, in the fourth quarter of 2022. He thinks Fisker is targeting the right segment of the market, namely upscale SUVs, and that Fisker's price points for the Ocean are on target. 

A silver Fisker Ocean prototype, an edgy upscale electric crossover SUV.

Fisker's Ocean, an upscale electric SUV, is on track to a late-2022 introduction. Image source: Fisker.

The Ocean is expected to start at about $38,000, with fully loaded versions priced around $69,000, when deliveries begin in late 2022. The SUV will be built by auto-supplier Magna International (NYSE:MGA) under contract. 

Now what

Michaeli also sees "significant upside potential" for auto investors in the company's future entry into flexible leases. He feels that flexible leasing could substantially expand Fisker's total addressable market, by including consumers who don't have the up-front means to buy a vehicle, and possibly provide the company with an ongoing revenue stream over the lifetime of a vehicle. 

Michaeli isn't the only Wall Street analyst to have taken note of Fisker's "asset-light" business model. The upside of using a company like Magna to manufacture the Ocean is that Fisker doesn't have to build and tool its own factory; the downside is that the arrangement could add costs and chip away at Fisker's margins on the vehicle. 

How will all this play out? We'll find out over the next couple of years.