No need to catch the falling knife workhorse, says one analyst
The wheels came off the bull cart for Workhorse (WKHS) on Tuesday. After several delays and months of speculation, the US Postal Service finally made a decision on who the coveted contract would go to to renovate its old fleet of delivery trucks. It was not a workhorse. The 10-year, $ 482 million contract was awarded to Oshkosh, who will now be responsible for assembling between 50,000 and 165,000 NGDVs (Next Generation Delivery Vehicles). Investors in the electric delivery van startup, who were dejected and deflated, sent shares down 52% in the last two trading sessions. The rejection is a massive blow to Workhorse, who was considered a favorite for the award. The contract was expected to seriously increase its production figures, but the contract was seen as an important catalyst to propel the company forward. And now that? Colliers analyst Michael Shlisky says “investors can be bitten by a snake for some time.” “Importantly,” said the analyst, “we had never included the USPS RFP (request for proposal) in our assessment of WKHS, simply because the award was always uncertain; as such, we are not altering our estimates at this time. “However, USPS disappointment aside, ahead of Workhorse’s fourth quarter results (3/1), other questions remain. The company has said that production Q4 would be smooth, due to elevated COVID-19 cases, battery supply issues, hiring delays and the implementation of shop floor improvements. Shlisky will be eager to find out if production issues have been resolved. and if the company is still on track to produce 100 vehicles a month by the end of the first quarter. The other key issue concerns increasing competition in the last mile delivery segment. That is, how does Workhorse plan to stand out in a increasingly crowded space? Ford, as expected, announced its E-Transit model, but General Motors also announced the launch of a potential competitor for the Workhorse C-650, the BrightDrop. , Xos Trucks has just announced that it will go public through a merger of SPAC, as does Ree Auto, which can serve all types of Class 1-7 commercial vehicles and is scheduled to contribute $ 436 million for its own transaction. fusion of SPAC. “When combined with the mixed readings we’ve been getting at best,” Shlisky said, “we think now is not the time to jump on the long side of WKHS.” Consequently, the analyst rates WKHS as Neutral (that is, Hold), without suggesting a price target. (To view Shlisky’s track record, click here) However, Shlisky’s colleagues have a price forecast, and after Tuesday’s massive drop, the median $ 22 street price target could yield gains of ~ 47 % in the next year. The consensus of analysts qualifies the stock as Moderate Buy, based on 3 purchases and holds, each. (See WKHS stock analysis on TipRanks) To find good ideas for trading EV stocks with attractive valuations, visit TipRanks’ Best Stocks to Buy, a recently launched tool that ties together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.