Last summer, Ben Kallo, an analyst at Baird, wasn't so optimistic about shares of QuantumScape (QS 0.96%), and he turned out to be right.
But now he believes the stock can reverse its recent downward trajectory thanks to the company's recent personnel move, and he sees it climbing back to $8 -- a 60% increase over the original $5 price target that he had assigned.
NASDAQ: QS
Key Data Points
A C-suite change could help facilitate the company's growth
QuantumScape announced this week that its current CEO, Jagdeep Singh, is stepping down from the company's helm, and the company's president, Dr. Siva Sivaram, will take his place. In Kallo's estimation, this move will be an important catalyst in helping the company achieve commercialization of its disruptive solid state batteries.
Sivaram is well-suited to advance the company toward commercial production since he has enjoyed previous success in a similar capacity. In its press release announcing his hiring, QuantumScape noted that Sivaram previously served as president of Western Digital Corporation. Consequently, his "deep technical acumen and decades of experience taking complex emerging technologies into high-volume production, building factories, establishing partnerships and scaling manufacturing worldwide made him a natural fit for the role [at QuantumScape]."
The company expects to start low volume production of its prototype QSE-5 cell in 2024 and ramp up production volume in 2025. However, the company's on firm financial footing. Management foresees 2024 capital expenditures of $70 million to $120 million, and as of the end of 2023, QuantumScape had $143 million in cash and $1.1 billion in liquidity.
Small successes can power QuantumScape higher
Shaking off some of the skepticism that was baked into the original price target, Kallo's $8 price target seems very attainable for QuantumScape's stock. It's important to recognize that Kallo doesn't base his opinion on the company actually achieving commercialization. Instead, he solely acknowledges the company's change in leadership. If QuantumScape continues to make progress toward bringing its solid state batteries to the market -- something that it's done in 2023 -- it's quite likely that shares will once again touch the $8 mark.
