TuSimple
- TuSimple is "leading the autonomous revolution in trucking" according to Bank of America.
- Analysts led by Ken Hoexter initiated coverage on TuSimple with a "buy" rating and a $51 price target.
- The price target implies a potential 36% jump in share prices over the next year.
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TuSimple is "leading the autonomous revolution in trucking" and its stock could jump 36% over the next year, according to Bank of America.
In a note to clients on Monday, analysts led by Ken Hoexter initiated coverage on TuSimple with a "buy" rating and a $51 price target.
The price target represents a potential 36% jump in share prices from Friday's closing price of $37.29 per share.
Hoexter and his team said that TuSimple is set to take a large chunk of the $4 trillion total addressable freight trucking market over the next decade.
TuSimple hopes to operate an Autonomous Freight Network (AFN) across the US that will provide a comprehensive, turnkey solution to companies that want to do away with traditional trucking methods.
The company has received 240 patents, has mapped more than 3,000 miles of high definition routes to date, and boasts over 5,700 orders for its level 4 autonomous semi-truck just four months after it began pre-sales.
TuSimple also has investments and partnerships with the likes of UPS, Union Pacific, Canadian National, Werner, Schneider National, US Xpress, Kroger, McLane, Navistar, TRATON, NVidia, Cummins, and more.
By 2024 the company hopes to have more than 7,500 autonomous trucks on the road, and by 2027 that number is set to move to 100,000.
BofA's Hoexter said TuSimple's revolutionary model removes drivers from the cab and reduces fuel costs, improving the overall cost structure of the freight business.
TuSimple's model "creates a structure to save 50% of operating costs (40% from driver-out and 10% better fuel efficiency) vs. a traditional truck operating model."
BofA analysts also praised TuSimple's category-leading technology in their note to clients.
TuSimple boasts a 1,000-meter perception range and 35-second planning horizon, allowing the company's trucks to operate at highway speeds of up 75 mph where competitors like Waymo max out at 55 mph.
BofA said they believe TuSimple is "demonstrating its proficiency" as a paid operator which gives the analysts growing confidence in the name.
TuSimple is shipping over 100 loads per week with its current stock of 70 retrofitted trucks on the road. The company also has no debt on the books due to significant investments from big-name buyers.
There are some risks to TuSimple's business model, however, according to BofA.
First, there's the development risk. Since TuSimple currently only has 70 autonomous trucks, its commercial ramp to over 7,500 by 2024 could be "aggressive," BofA analysts wrote.
There's also a significant regulatory risk as only 24 states currently allow for commercial autonomous trucking deployment. And finally, there's the risk of competition from the likes of Waymo, Daimler, and Tesla.
Still, at current prices, TuSimple offers an "attractive" entry point to the $4 trillion total addressable market for autonomous trucking, according to Bank of America.