After markets close Monday, TuSimple Holdings Inc. (NASDAQ: TSP) will release its first quarterly report as a publicly traded company. TuSimple is developing autonomous driving technology for semi trucks and just came public in mid-April. Shares closed Friday at $37.29, more than $2.00 below the IPO price.
Nine sell-side analysts weighed in on the company Monday morning, with eight putting the equivalent of a Buy rating on the stock and one assigning a Neutral rating.
Analyst Ben Callo of Baird is among the analysts who are bullish on TuSimple. He has given the stock an Outperform rating and a price target of $52. At Friday’s closing price, Baird’s target represents upside potential of nearly 40%.
Kallo’s evaluation is based on his belief that TuSimple could “dominate” one of the four vectors that will separate the winners from the also-rans in the mobility market. Those four vectors are autonomy, operating systems, manufacturing and battery technology. Kallo believes TuSimple “could dominate one of these vectors” and, if it does, the “growth opportunity is significant.”
However:
[C]ompetition is steep, and we need to better understand TuSimple’s strategy around level 5 autonomous — albeit a technology likely available in the distant future.
Baird’s analyst is referring to the SAE Levels of Driving Automation standard, of which Level 5 is the most autonomous with full self-driving capability.
The total available market for the truck freight market is estimated at $4 trillion, and TuSimple’s autonomous driving technology has been specially designed for semi trucks. According to Kallo, the company will be demonstrating “full driver-out” technology later this year. That would be equivalent to SAE Level 4 autonomous driving.
TuSimple will offer its technology in trucks built by its original equipment manufacturer partner, Navistar, which customers could buy and then subscribe to TuSimple’s software, or customers could lease the Level 4 trucks directly from TuSimple. Baird’s Kallo writes:
TuSimple management expect the first shipments of its trucks to begin in 2024 at a price point of ~$200k, or ~$50k-plus above traditional semi price points. In addition to the semi-truck sales, TuSimple plans on establishing a recurring revenue stream of services by selling to its truck customers value-add services that not only fully enable autonomy but also help in fleet management.
Brian Ossenbeck at JPMorgan has much the same view as Baird’s Kallo. JPMorgan has initiated coverage on TuSimple with an Overweight rating and a December 2021 price target of $55. In Ossenbeck’s view, “TuSimple is currently leading the industry in publicly demonstrated capabilities and partnerships compared to competitors like Waymo and Aurora which crossed over from passenger AVs.”
Ossenbeck also points out that a Level 4 semi truck already could be legally deployed in 24 states.
Neither Baird nor JPMorgan expects TuSimple to post a profit through 2022, and JPMorgan expects adjusted losses to continue through fiscal 2023.
Other analyst firms initiating coverage of TuSimple on Monday:
- Citigroup: Buy, price target $75
- Needham: Buy, price target $60
- Cowen: Market Perform, price target $38
- RBC Capital Markets: Price target $52
- Morgan Stanley: Overweight, price target $48
- Piper Sandler: Overweight, price target $50
- BofA Securities: Buy, price target $51
TuSimple’s stock traded up about 3% Monday morning, at $38.42 in a post-IPO range of $32.13 to $41.50. The average daily trading volume is 3.2 million shares.
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