'Watch Out Tesla': Barclays Starts Warren Buffett-backed BYD at Overweight

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By Senad Karaahmetovic

A Barclays analyst initiated research coverage on BYD (OTC:BYDDY) with an Overweight rating and a $40 per share price target.

The company is described as a “China EV leader” that dethroned Tesla (NASDAQ:TSLA) to become the No.1 global electric vehicle maker by deliveries earlier this year.

“BYD’s vertically integrated business model with the majority of critical components (batteries, auto semis) made in-house, very broad product portfolio – in contrast to Tesla and many other automakers – with laser focus on product design (EVs are a consumer product at the end of the day), and core technologies (e.g. its differentiated Blade batteries) serve as the cornerstones of its success,” the analyst said in a client note.

The analyst is especially positive about BYD’s performance in the domestic China market, which has an EV penetration rate of above 20%. In this market, BYD has a market share of over 33% as of July 2022.

“We believe it is just a matter of time before BYD arrives in the US; the largest auto market in the world,” the analyst noted.

The analyst goes even further in praising BYD as he claims the company could become one of the future leading tech names in the world.

“There have not been many product-led Chinese tech companies that really have made an impact on the global stage (Lenovo comes to mind). We believe BYD has the potential to become a member of that elite and highly exclusively club,” the analyst concluded.

BYD made headlines in August when Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) started trimming its massive stake.