Both passenger cars and commercial vehicles, such as huge rigs rumbling down the highway, will be equipped with self-driving technology. TuSimple, a self-driving truck startup, sees this as an opportunity.
Wall Street is sitting up and taking note. Todd Fowler of KeyBanc initiated coverage of TuSimple (ticker: TSP) on Monday evening, with a Buy rating and a $50 price target.
TuSimple’s stock was trading at $27.54 in early Tuesday trading, up approximately 5.8%. The S&P 500 and the Dow Jones Industrial Average were both down approximately 0.4 percent and 0.6 percent.
“Fully autonomous capabilities represent a must-have technology for the for-hire trucking industry given the potential to lower the cost to serve and improve asset utilization,” Fowler mentioned in his coverage initiation report
Of course, there is a risk that drivers could lose their employment, but self-driving trucks will take years to gain traction in the market. Not every trucking company will immediately deploy self-driving technology. According to the Census Bureau, about 3.5 million individuals work as truck drivers. According to the Bureau of Labor Statistics, there are approximately 160 million job openings in the United States.
Furthermore, completely self-driving trucks are still a ways off, despite TuSimple’s efforts. In late December, it completed an 80-mile fully autonomous drive on a public route. Self-driving trucks, according to Fowler, will be ready for widespread usage around 2024 or 2025.
“In addition, we believe the Company’s for-hire carrier model coupled with its Autonomous Freight Network, combined with potential expansion outside of the United States, broadens the addressable market,” state the analyst.
TuSimple intends to sell self-driving technology to existing trucking companies. It also intends to run a self-driving truck… fleet of its own.
Sales are expected to reach $350 million in 2025, rising to $3.2 billion by 2030, according to him. TuSimple isn’t anticipated to break even until 2024.
The stock may be rising since Fowler’s $50 target price is nearly 80% higher than where it is currently trading, but his prediction appears to be conservative in comparison to what his Wall Street counterparts have indicated. TuSimple stock has a consensus analyst price target of $55, up nearly 100% from recent levels.
Twelve out of sixteen analysts, or 75%, rate shares as Buy, including Fowler’s call. For small-capitalization equities, the average Buy-rating ratio is around 65 percent. It’s yet more proof that Wall Street believes self-driving semi-trucks have a bright future.