What happened
Stocks get price-target raises from analysts all the time, but rarely do they receive a raise like this. On Wednesday, a prognosticator nearly doubled his price on auto battery maker Enovix (ENVX 10.45%). As a result, investors piled into the company, and its share price rose by more than 15%.
So what
The analyst in question is Cowen's Gabe Daoud Jr., who upped his Enovix price target to $36 per share, far above his previous $19 estimate. In doing so, he's maintaining his outperform (buy) recommendation on the stock.
Enovix specializes in batteries for electric vehicles (EVs), an automotive segment that continues to be very hot and attract plenty of investor interest. This trend has only snowballed since President Joe Biden signed the Inflation Reduction Act, which contains a basket of incentives for Americans to buy EVs.
The timing of this is particularly advantageous for Enovix, because earlier this month it said that it booked its first quarter of revenue. The company's second quarter saw it earn over $5 million, mainly in service revenue but also in commercial battery sales.
Now what
Daoud's new enthusiasm derives from his belief that Enovix will partner with established battery manufacturers, which will sell its wares. Under such arrangements, the relatively early-stage company would garner a cut of each sale.
The analyst is also hopeful that the batteries might end up in Tesla's popular EVs because former Tesla executive Greg Reichow is on the Enovix board of directors.
