QuantumScape Catches a Downgrade. The Stock Rose.

A prototype QuantumScape battery cell. (Courtesy QuantumScape)

Key Points

• QuantumScape shares rose 1.6% to $11.65 despite Evercore ISI downgrading the stock from Buy to Hold.
• Evercore ISI increased its price target for QuantumScape to $12 a share from $8, potentially aiding the stock’s rise.
• QuantumScape’s stock has gained about 121% year to date, driven by progress in solid-state battery technology.

Wall Street downgrades typically hurt stocks, but not always.

Shares of QuantumScape , a pioneer in solid-state lithium-ion batteries, rose early Monday even though Evercore ISI lowered its call on the stock.

QuantumScape stock opened lower but rebounded for a gain of 3.1% on Monday, closing at $11.83, while the S&P 500 and Dow Jones Industrial Average rose 1.6% and 0.4%, respectively.

The move came after Evercore ISI downgraded QuantumScape shares to Hold from Buy, according to Wall Street ratings aggregators. Evercore didn’t immediately respond to a request for the report.

The broker’s price target, however, went up to $12 a share from $8. That certainly helped.

Another thing that might have helped was recent trading. Shares are pretty beaten up, with a loss of 21% over the month heading into Monday trading.

That left shares up about 121% year to date. Investors have been encouraged by progress made commercializing QuantumScape’s battery technology. In June, for instance, the company announced its “Cobra Separator Process” had entered “baseline production,” which should lead to lower-cost output of solid-state lithium-ion batteries.

Solid state, for QuantumScape, means its batteries have no liquid electrolyte that facilitates the flow of electrical charge. Solid-state EV batteries promise lower costs, more per-charge energy, and a better safety record. While they represent a possible panacea for EVs and battery-storage markets, the technology isn’t ready for industrial production.

Wall Street sees significant sales in 2028, but ISI Evercore doesn’t expect that to happen until 2029.

When the technology is ready, and risks to its development, are critical for QuantumScape’s ultimate success. But when substantial amounts of revenue aren’t expected to arrive for years, a difference in timing of six or 12 months doesn’t always affect investor sentiment, especially for more speculative stocks.

Neither do Wall Street ratings.

ISI Evercore was the last firm that had a Buy rating on QuantumScape stock. Now, five rate shares at Hold, and three rate shares Sell, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for QuantumScape stock is $10.

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