With QS Stock Up 83% in a Month, Analysts Flag Key Risks for QuantumScape

QuantumScape (QS) shares have been on a tear this week after the battery maker successfully integrated its advanced Cobra separator process into baseline cell production. 

While that marks a significant milestone for the San Jose-headquartered firm, Baird recommends that investors tread with caution on QS shares since they remain entangled in several risks. 

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Including recent gains, QuantumScape stock is up nearly 100% versus its year-to-date low. 

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Why Baird Recommends Selling QuantumScape Stock

Baird’s senior analyst Ben Kallo believes that QS shares may have overreacted to the Cobra news this week and, therefore, run the risk of losing their gains and returning to their early June levels in the coming sessions. 

Kallo recommends against chasing the rally in this battery stock partly because QuantumScape is a pre-revenue company, indicating heightened uncertainty, execution risks, and vulnerability to sentiment-driven volatility.  

“We seek additional details on the go-to-market strategy before becoming more constructive” on QuantumScape stock, the analyst added in his research note. 

Continued Losses Could Hurt QS Shares Further

Baird maintained its “Neutral” rating on QuantumScape stock this morning with a price target of $6 indicating potential downside of nearly 15% from current levels. 

According to Ben Kallo, a slower production ramp could stand in the way of the company managing to sustain its recent gains as well.   

Moreover, QS shares remain unattractive also because the battery-maker is narrowing its loss at a rather unimpressive pace. In Q1, the NYSE-listed firm lost $114.4 million on a GAAP basis – down less than 5% on a year-over-year basis. 

Kallo’s call on QuantumScape arrives only days after his peers at William Blair also downplayed its Cobra milestone, saying it was a well-telegraphed development and not a pleasant surprise for investors. 

Wall Street Recommends Cutting Exposure to QuantumScape

Wall Street’s consensus “Hold” rating on QuantumScape stock at writing is also not impressive. 

Analysts currently have mean target of $4.79 on QS shares, which signals potential downside of more than 30% from here. 

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On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.