Analysts at Roth Captal have reiterated their 'buy' rating on Electra Meccanica Vehicles Corp (NASDAQ:SOLO) and updated their valuation for the trendy Canadian electric vehicle car maker based on hopes for the Tofino, the company’s high-performance two-seater electric roadster sports car.
The broker's analysts also reiterated a $7.50 price target on the carmaker which is developing the all-electric SOLO, a single passenger vehicle, as well as the Tofino.
“We are updating our model and valuation to bring our methods in line with the consensus approach for market leaders. One consequence of this analysis is the relative importance of the Tofino roadster for valuation, where past success with the Inter-Meccanica roadster suggests a sound engineering foundation,” Roth analysts Craig Irwin and Andrew Scutt said in a note to clients.
“In our view, the largest catalysts in the next couple of years are likely to come from the selection of a design partner and launching production of the Tofino,” they said.
The analysts noted that other upcoming catalysts included shipments from Zongshen, updated SOLO deliveries, the announcement of the site for a US manufacturing facility, or potentially in other geographies, commercial fleet partnerships, and the election of a Tofino design partner.
According to the analysts, ElectraMeccanica produced 50 SOLOs with Zongshen in 2019, and 64 SOLOs have been made by hand to date in the Vancouver facility.
“We forecast SOLO deliveries of 50 and 1,000 units in 2020 and 2021, growing to 5,000 in 2025. Our model also factors the launch of the Tofino roadster in 2023 with 15,000 units delivered in 2025,” said the analysts.
The analysts expect the Canadian electric car maker to break even north of 2,500 annual units, and offers a consolidated breakeven forecast for 2023, when the Tofino should be accretive after launch costs start to taper down.
“Our valuation includes a $40 million cash benefit and 33 million shares in dilution from options and warrants outstanding,” said the analysts.
Electra Meccanica stock was trading nearly 10% lower around $3.23 on Tuesday, a day that the tech-heavy Nasdaq has tumbled as the coronavirus pandemic extended its grip.
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