Shares of California-based electric-vehicle start-up Fisker (FSR 4.17%) were trading sharply higher on Friday after an influential Wall Street analyst initiated coverage of the company with a bullish note.
At 11:00 a.m. EST, Fisker's shares were up about 26.3% from Thursday's closing price.
In a note released after the U.S. markets closed on Thursday, Morgan Stanley analyst Adam Jonas initiated coverage of Fisker with an overweight rating and a price target of $27.
Jonas, who is well known to electric-vehicle investors for his bullish coverage of Tesla and other names, likes Fisker's design-focused, "asset-light" business model. As Jonas sees it, the model will improve time to market and -- because Fisker doesn't need to build and maintain a factory -- lower the company's break-even point.
Jonas thinks that Fisker stands out among electric-vehicle start-ups for its lower level of risk and well-thought-out strategy.
Here's what Jonas is getting at. Fisker's founder, Henrik Fisker, is an auto designer by trade, with a portfolio of great-looking upscale vehicles to his credit. As you'd expect, the company's first vehicle, the Ocean electric SUV, has a striking, attractive design. And rather than building its own factory, which could cost $1 billion or more up front, Fisker has contracted with a unit of auto supplier Magna International (MGA 2.01%) to build the Ocean and its other upcoming models.
I agree with Jonas that as electric-vehicle stocks go, Fisker -- while still speculative -- does seem like a good bet to execute. (Full disclosure: I own a small position in Fisker.)
Auto investors can look forward to an update when Fisker reports its fourth-quarter and full-year 2020 results after the U.S. markets close on Thursday, Feb. 25.