In perhaps one of the most shocking calls of this year, Wedbush analyst Dan Ives pounded the table on Tuesday for embattled Vietnamese electric vehicle (EV) manufacturer VinFast (NASDAQ:VFS). Although the company enjoys a distinct niche in the ultra-competitive EV space, it has struggled in the charts. Nevertheless, Ives went contrarian with an “outperform” rating on VFS stock, a call that walks a very thin line.
According to a SeekingAlpha report, Ives mentioned that the Wedbush team spent time in Vietnam seeing the VinFast factory in person. There, the researchers gathered data on the global logical and distribution processes to intimately grasp the company’s business model. Apparently, the hands-on experience sparked a paradigm shift relative to outside market projections. Ives stated the following:
“While some investors will paint Vinfast negatively with the SPAC brush, we strongly disagree with the bear’s criticism. We have been to auto factories around the world and what Vinfast has built in Vietnam is unique and one of the most impressive facilities I have seen with a scale and EV technology that is foundational to our bull thesis.”
After years of research and development, expending massive engineering resources and fostering complex supply chain relationships, VinFast appears ready for prime time, per Ives. As a result, the analyst assigned a $12 price target to VFS stock, implying a doubling of value of the time-of-writing price.
VFS Stock Can’t Hide Myriad Other Concerns
Another element that adds to the bullish narrative for VFS stock centers on VinFast CEO Madame Thuy. Per the aforementioned report, Ives stated that Thuy represented one of the EV maker’s keys to success. In particular, the expert believes that Thuy commands a vigorous understanding of the EV business model.
As well, Ives states that VinFast has positioned itself to potentially deliver a durable product portfolio for electric mobility worldwide. And that might be the case on paper. According to S&P Global, Vietnam’s total gross domestic product (GDP) may rise from $410 billion in 2022 to $750 billion by 2030. Therefore, VFS stock may be able to ride the coattails of a compelling growth story.
However, that doesn’t take away from the myriad challenges that VinFast faces. On a broader level, the EV sector suffered badly this year from consumer demand erosion to sector price wars. As a result, the pain distributed itself across the entire value chain, including the underlying lithium market. With potentially lower commodity prices, larger-scale companies could pressure VinFast, boding poorly for VFS stock.
Second, it’s important not to have a short memory. Late last month, VFS stock dropped to a new 52-week low amid serious viability concerns. At the time, investors’ concerns spiked due to the dilution inherent in VinFast’s capital raise proposal.
To be fair, shares popped higher immediately afterward but the fundamental jitters remain.
Why It Matters
As investors might imagine, covering VFS stock represents a lonely task. Alongside Ives, only one other analyst, Cantor Fitzgerald’s Andres Sheppard, has VinFast on their radar. However, the other rating also happens to be a “buy,” albeit at a lower price target ($7).
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
