Foxconn shares have a reason to buy-Goldman Sachs
2022.12.05 06:33
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Foxconn shares have a reason to buy-Goldman Sachs
Budrigannews.com – Goldman Sachs pointed to a stock in the market for electric cars, which will continue to grow in the coming years. This stock could hold some excellent surprises for investors.
The investment bank placed the stock in the larger context of the electric market in a CNBC report, stating that “outsourcing of EV manufacturing,” which will grow as vehicles become increasingly technology-driven, is the main industry trend.
According to the bank’s estimates, the outsourcing trend that GS cited will save automakers from having to build supply chains from scratch and allow brands to penetrate markets where they lack manufacturing capacity. According to GS, the outsourcing trend will reach $36 billion in 2025 and $144 billion in 2030.
The Taiwan-listed Hon Hai Precision (TW:) will benefit from this trend for the investment powerhouse. Formerly Foxconn (TW:), the largest iPhone supplier and world’s largest electronics manufacturer, well-known for recent anti-COVID protests that have impacted Apple (NASDAQ:) plant in China.
With a target price of NT$134 ($4.40), Goldman has upgraded the stock from its previous Neutral rating to Buy, representing an upside of nearly 28% from current prices.
If EV deliveries continue as anticipated, the Taiwanese company’s tp would be $200, representing a 90 percent upside under the “bull case” scenario.
Foxconn has “a global presence,” with factories scattered across 24 nations, which sets it apart from rivals in terms of technical expertise. A significant advantage because it meets “the automotive industry’s requirements for localized production,” Goldman said.
That “can also alleviate some macro uncertainties such as those related to Covid, geopolitical tensions, and inflation,” as stated by Goldman.
In general, the electricity market is in a very good spot because of the giant Taiwanese company’s potential. “21.5% in 2025 and 33.3% in 2030, up from its prior forecast of 9.6% and 25.7%, respectively,” states investment bank Cowen of the United States.
“[t] he boost was largely driven by Tesla’s continued success, new vehicles from incumbent domestic manufacturers (OEMs), and continued strength in China and Europe,” Cowen analysts state.
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