The turbulent electric vehicle (EV) sector has provided a lot of up-and-down drama lately for investors, who should be very selective these days. But one they should select, at least according to one analyst, is next-generation battery maker QuantumScape (QS 2.25%). Here's a take on his latest take, if you will.
Better battery needed
QuantumScape is currently developing a higher-energy-density EV battery than the typical products used today, which in broad terms means one that can provide notably higher driving range per charge.
The company's power packs haven't yet made it into the guts of any cars; however, they are progressing. In March, QuantumScape revealed that it has started shipping a prototype of such a battery cell to certain customers.
According to the bullish -- if cautious -- analyst, one great advantage QuantumScape has is that it's well-funded and thus isn't under extreme pressure to deliver a revenue-generating product right away.
"With over $1 billion in liquidity and improvements to cash burn achieved over the last several quarters, QS has extended its current cash runway into 2026 as the company continues along its commercial scale-up path," wrote Jordan Levy of Truist Securities in a new research note.
In that analysis, Levy reduced his price target from $8 per share to $6; in his view, downbeat news on the wider EV industry will somewhat limit the upside of the stock for now. Still, even at the reduced target, he expects upside of 12% on the most recent closing share price.
NASDAQ: QS
Key Data Points
QuantumScape has much going for it
To me, QuantumScape seems determined to prove it can fulfill the promise of a better battery for EVs, a product that is greatly needed in the industry.
Current range-per-charge figures aren't impressive enough on their own to shift the car-buying public to EVs in great numbers. This company is in front of a spectacular opportunity, and given its low share price and that cash cushion Levy mentioned, I think it's a fine bet to become the Next Big Battery Thing.
