The average target price of REE is 1.9 and suggests 162% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 3.0. This translates into 320% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 1.0. This suggests 40% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

REE Automotive Ltd. operates in the e-mobility business. The company develops REEcorner technology, which integrates vehicle drive components, including steering, braking, suspension, powertrain, and control into the arch of the wheel. The company also develops REEboard, a flat and modular EV chassis. The company is headquartered in Herzliya, Israel.

Israel

REE Automotive Ltd.

Consumer Cyclical

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

REE reported revenue of USD 1mn in the last 12 months, down 61% from FY23. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 26% from FY23 to USD -9.26. Market expects EPS to reach USD -6.20 in FY24.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 97ppts and its growth accelerated by 17ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to -13732.3% in the last 12 months, a decline from -7095.2% in FY22. 

Historically, REE has reported very poor net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled -17522.5%, down from -7102.5% in FY22. 

REE Automotive Ltd. reported a return on equity (RoE) of -94.1% in the last 12 months, down from -65.1% in FY22. The market consensus projects an RoE of -33.4% in FY23, again behind its peers. 

In the last 12 months, the return on capital employed (RoCE) declined to -71.4%, below the peers. The consensus estimate for FY23 for RoCE is -31.6%, again behind the peers. 

Another important profitability metric, return on assets (RoA), amounted to -61.1% in the last 12 months, a decrease from -53.1% in FY22. The market analysts predict that RoA will be -27.3% in FY23, again weaker than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -23.7 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

REE has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is very unstable and remains extremely favourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to slow historical revenue growth, bleak profitability, negligible return on capital, poor working capital management, inadequate interest coverage, and poor cash flow generation. We note low margin volatility and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, REE is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, REE is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

From both historical and forecast perspectives, the stock is fairly priced compared to similar stocks. In particular, the stock is of fair value on EV/EBITDA. 

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REE Automotive Ltd.

$ 0.75

3

REE Automotive Ltd.

$ 0.75

3

Risk factor

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Risk / Profitability

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Risk factor

Profitability factor

$ 0.75

About

About

REE Automotive Ltd.

$ 0.75

3

REE Automotive Ltd.

$ 0.75

3

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 0.75

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