By Senad Karaahmetovic
Barclays analysts initiated research coverage of the U.S. Autos & Mobility industry with a Neutral view. This stance is based on three key factors: 1) A mixed cycle view; 2) Megatrends positive for industry long term, but not without challenges; and 3) Valuations currently reasonable.
"The current set-up is unprecedented, with US vehicle prices at all-time highs and US inventories still at depressed levels. On one hand, recession risks imply challenges for the cycle, as does elevated (even if normalizing) inflation. Yet there are offsetting positives," the analysts wrote in a client note.
As far as individual stocks are concerned, they assigned 6 Overweight ratings, including Tesla (NASDAQ:TSLA), Rivian (NASDAQ:RIVN), and Mobileye (NASDAQ:MBLY).
"TSLA is the company which appears most favorable in our Two Clocks framework, as TSLA is by and large managing to "one clock" – with near-term strength in financials, alongside leading the way on EV and the software transition," they said on the EV giant.
The analysts also initiated research coverage on Ford Motor (NYSE:F) and General Motors (NYSE:GM) with an Equal Weight rating.
"We believe our call on GM is non-consensus, as the sell-side is skewed to Buy/Outperform ratings. We are Equal Weight on both Ford and GM as we believe the combination of recessionary pressures on near-term earnings (likely reducing pricing) as well as margin dilution from the early ramp of EV volumes may limit upside in the stocks. We prefer GM over Ford as we believe GM is further along in the EV transition, is exhibiting stronger execution, and has upside optionality in AV given its stake in Cruise," the analysts added.
Fisker (NYSE:FSR) and Visteon (NASDAQ:VC) are the only two stocks with an Underweight rating.