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TuSimple Stock Can Rise 80% Because Self-Driving Tech Is a ‘Must-Have’ in Trucking

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TuSimple completed a fully autonomous 80-mile drive on a public road in December.
Courtesy TuSimple

Self-driving technologies are coming both to passenger cars and commercial vehicles such as big rigs rattling down the highway. That spells opportunity for TuSimple, a self-driving truck start-up.

Wall Street is taking notice. On Monday evening, KeyBanc analyst Todd Fowler launched coverage of TuSimple (ticker: TSP) with a Buy rating and $50 price target.

TuSimple shares were up about 5.8% at $27.54 in early trading Tuesday. The S&P 500 and Dow Jones Industrial Average were down about 0.4% and 0.6%, respectively.

“Fully autonomous capabilities represent a must-have technology for the for-hire trucking industry given the potential to lower the cost to serve and improve asset utilization,” wrote Fowler in his coverage initiation report. The technology has the potential to lower the cost of operations significantly, especially given that drivers account for much of the costs in trucking.

The potential for drivers to lose their jobs, of course, is significant too, but it will take years for self-driving trucks to make inroads into the market. Not every trucking business will adopt self driving technology right away. About 3.5 million people drive trucks for a living, according to the Census Bureau. There are about 160 million jobs to fill in the U.S., according to the Bureau of Labor Statistics.

What is more, fully self-driving trucks aren’t here just yet, though TuSimple is making progress. It completed an 80-mile, fully autonomous drive down a public road in late December. Fowler believes self-driving trucks will be ready for wider use around 2024 or 2025.

“In addition, we believe the Company’s for-hire carrier model coupled with its Autonomous Freight Network, combined with potential expansion outside of the United States, broadens the addressable market,” said the analyst. TuSimple plans to sell autonomous-driving solutions to existing truck operators. It also plans to operate its own fleet of self-driving trucks.

He projects sales of $350 million in 2025, growing to $3.2 billion by 2030. TuSimple isn’t expected to generate significant sales until 2024.

The stock might be jumping because the $50 target price is about 80% above where the stock is trading, but Fowler’s call actually looks conservative relative to what his peers on Wall Street have said. The average analyst price target for TuSimple stock is about $55 a share, up almost 100% from recent levels.

Including Fowler’s call, 12 out of 16 analysts, or 75%, rate shares at Buy. The average Buy-rating ratio for small capitalization stocks is about 65%. It’s more evidence that Wall Street is bullish on the potential for self-driving semi-trucks.

Write to Al Root at allen.root@dowjones.com

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