Bernstein says this Chinese EV maker should be worth close to Tesla

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on Nov 27, 2023
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  • Bernstein analyst sees upside in shares of BYD Co Ltd to HK$359.
  • Toni Sacconaghi says BYD is growing faster than Tesla Inc.
  • BYD stock is currently down about 20% versus its YTD high.

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BYD Co Ltd (OTCMKTS: BYDDF) down about 20% versus its year-to-date high is an opportunity to invest in a very high-quality name at a deep discount, says Toni Sacconaghi – a Bernstein analyst.

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Why is Sacconaghi bullish on BYD stock

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On Monday, Sacconaghi said shares of the electric vehicle maker could climb to HK$359 – up roughly 60% from here.

He’s super bullish on the BYD stock primarily because the Chinese firm is growing significantly faster than Tesla Inc.

We believe that the investment theses that Tesla has a structural cost and scale advantage appears increasingly less credible, and arguably more applicable to BYD.

BYD generated about $22.74 billion in revenue in its latest reported quarter versus Tesla at $23.35 billion – and yet, former currently has a market cap of $90 billion only versus $750 billion for the latter.

Sacconaghi has an underperform rating on Tesla

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Sacconaghi rates Tesla at underperform at present and expects it to earn $8.7 billion in 2024 on $114 billion in revenue.

In comparison, BYD, as per the analyst, will come in at $7.1 billion and $112 billion, respectively – which makes it way more attractive considering the valuation difference between the two.

The Bernstein analyst also recommends owning BYD stock as its “side bets” are being overly discounted even though they made up 26% of the company’s overall revenue in 2023.

More importantly, the Chinese EV company is currently larger in scale compared to Tesla as far as the battery/energy storage business is concerned, Sacconaghi concluded.

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