© Reuters. Bank of America Securities cuts price target on TuSimple (TSP)
By Michael Elkins
TuSimple Holdings (NASDAQ:) is up 1.09% in pre-market trading on Wednesday after Bank of America Securities reiterated an Underperform rating on the stock and cut the price target to $1.00 (from $2.50). The price cut follows the announcement that the company has terminated its 2020 electric vehicles joint development agreement (JDA) with Navistar (NYSE:). The relationship was ended by Navistar primarily due to governance concerns as TuSimple transitioned across 3 different CEOs (Dr. Xiaodi Hou, Dr. Ersin Yumer, and now Mr. Cheng Lu) over the span of 3 weeks, and then fired its board of directors.
The canceled JDA represented a strategic partnership to co-develop Level 4 autonomous semi-trucks by 2024. The completion of TuSimple’s manufacturing plan with Navistar by 2Q24 was an important checkpoint for its path to eventual profitability.
BofA Securities analysts wrote in a note, “In absence of a commercialization strategy, the long-term financial outlook for TuSimple is now far less visible. Although Tusimple noted that the terminated agreement does not preclude Navistar from future partnership, we view this as a major negative event for the company.”
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