Morgan Stanley sees a 300% upside in this EV battery maker

Freyr Battery SA (NYSE: FREY) is up nearly 20% this morning after a Morgan Stanley analyst named it his top pick – a title previously held by Ferrari.

Freyr stock could climb to $26 a share

On Wednesday, Adam Jonas reiterated his “buy” rating on the stock and raised his price target to $26 even though it’s a company that’s yet to produce a revenue.

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The bullish call is primarily predicated on passage of the Inflation Reduction Act. In a note clients, he said:

The on-shoring theme spurred by the IRA will help incentivize EV and battery production domestically. We think, the environment is becoming ripe for Freyr to become a real player in the global battery economy later this decade.

Freyr manufactures lithium-ion batteries (rechargeable) for electric vehicles. Jonas prefers this one over its rivals as it uses a technology that saves both materials and time.

Including the price action following this energy news, Freyr stock is now up 140% since late June.

Freyr stock could even be worth $60

Interestingly, in the best-case scenario, the analyst expects Freyr to actually be a $60 stock – a 300% increase from here.

Jonas is also constructive on “Giga Arctic” – a new battery plant the company is setting up in Norway with an annual battery capacity of 29 gigawatt hours; sufficient to power about half a million electric vehicles per year.

Strong pedigree of customer off-take, strategic relationships, Norwegian advantages and management experience – Freyr makes an extraordinarily strong pitch to a very broad range of investors and governments in a project-finance theatre.

The bull case forecasts Freyr will grow its capacity to 300 GWh by 2035. The analyst is bullish on its deal with Hana Technology as well.