Who’s ready for another SPAC EV player? Two of 2020’s hottest trends are showing no signs of cooling down in 2021.
Electric bus and van maker Arrival Group (CIIC) is expected to go public before the end of Q1 via a reverse merger with CIIG Merger Corp. The combined entity will go bythe ticker ARVL and will trade on the Nasdaq exchange.
The U.K.-based company is already hot property and is backed by institutional investors including BlackRock and by auto giants such as Hyundai. Furthermore, Arrival has already signed on the dotted line with UPS, who have put in an order for 10,000 electric delivery vans, with production slated to kick off in 2022.
Overall, Arrival says it has $1.2 billion’s worth of deals already in place.
“The investible universe of zero-emission truck manufacturers has expanded dramatically over the past year,” says Wolfe analyst Scott Group.
However, with the abundance of EV makers on offer, it is Group’s job to separate the wheat from the chaff and “identify those best and worst positioned to disrupt the industry.”
The analyst has no doubt which group Arrival belongs in.
“Arrival is a light and medium-duty van and bus manufacturer that we believe could be one of the best positioned long-term electrification plays given its 1) favorable short-haul end markets, 2) competitively priced vehicles vs. ICE incumbents, and 3) unique cost advantages driven by its innovative approach to manufacturing,” the analyst noted.
Group says that given the “weight, range, and operational characteristics of these fleets,” electric vans and buses are well suited to have the fastest adoption rates among commercial vehicles.
Beginning next year, Arrival will bring to market electric vans “priced at parity” with internal combustion engines (ICEs). Factoring in the reduced fuel and maintenance costs, the analyst thinks the company can achieve a “meaningfully lower total cost of ownership vs. competitors.”
If Arrival can gain 10% market penetration of the van and bus markets, Group thinks the company can potentially generate annual revenue between $15 billion to $16 billion, with “additional upside over time.”
Furthermore, the analyst expects Arrival to keep gaining share in the “~2M unit/year van and ~130K unit/year bus markets,” and counts its UPS order as providing the company with a “head start.”
Accordingly, Group rates Arrival shares an Outperform (i.e. Buy) along with a $50 price target. Investors stand to pocket a 67% gain should the analyst’s thesis play out. (To watch Group’s track record, click here)
No other analysts have reviewed Arrival just yet. However, with the EV/SPAC hype in full swing, anticipate others to jump on the bandwagon shortly. (See CIIC stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.