FREYR Battery to Overweight at Morgan Stanley on milestones and potential funding

Morgan Stanley upgraded FREYR Battery (NYSE:) to an Overweight rating (From Equal-Weight) and reiterated their 12-month price target of $13.00 following the company’s inaugural capital markets day in NYC.

The Tuesday event featured a number of material milestones, including manufacturing batteries at CQP, early discussions to diversify battery tech and expected progress on financing.

Analysts wrote in a note, “In our opinion, FREY is a relatively binary investment opportunity that we believe can show meaningful progress on commercial milestones (initial battery production and delivery of first cells to customers) that can potentially ‘unlock’ subsequent funding events. Our prior Equal-weight rating was meant to allow for more balanced expectations around challenges in moving early into the manufacturing phase and the un-predictability of the associated government/project financing. While the bull-bear spread is admittedly high (down >70% to bear case, up nearly 300% to bull case) recent share price underperformance and greater transparency around execution has improved the risk/reward. We believe the stock can outperform if it can successfully deliver high quality cells from the customer qualification plant (CQP) to customers, reinforcing the strategic narrative of a viable Norway/US battery player at a critical time for the development of on-shore/near-shore supply.”

Concurrent with their capital markets day Tuesday, FREY also made an exciting announcement regarding a significant achievement. They successfully assembled, charged, and discharged their inaugural battery cells at its CQP facility. This accomplishment holds great potential for customer validation in the near future. The company plans to send sample cells to customers within the next month, aiming to obtain their validation.

CQP’s successful battery cell assembly unlocks funding for Giga Arctic. More and more government incentives will be put on the table to attract manufacturing capacity locally and accelerate the energy transition. For example, the Norwegian government is expected to outline a battery industry support package this week. Also, in the U.S., IRA provides $45/KWh for battery cell and pack manufacturing and the DOE offers grants via the Loans Program Office.

Shares of FREY are up 13.11% in pre-market trading on Thursday.