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No need to catch the falling workhorse, says analyst
The wheels left the cart for Workhorse (WKHS) on Tuesday. After several delays and months of speculation, the US Postal Service finally reached a decision on who would go to the coveted contract to renew its aging fleet of vans. It wasn’t Workhorse. The $ 482 million 10-year contract was awarded to Oshkosh, which will now be responsible for assembling 50,000 to 165,000 Next Generation Delivery Vehicles (NGDVs). Discouraged and discouraged electric delivery van start-up investors sent the shares down 52% in the past two trading sessions. The rejection is a blow to Workhorse, who was considered a favorite for the award. With the expectation of seriously increasing its production numbers, the contract was seen as a great catalyst to propel the company forward. And now? Colliers analyst Michael Shlisky says that “investors can be bitten by a snake for some time”. “It’s important,” said the analyst, “we never included the USPS RFP (request for proposal) in our WKHS assessment, simply because the award was always uncertain; as such, we are not changing our estimates at this time. However, USPS disappointment aside, ahead of Workhorse’s fourth quarter results (3/1), other issues remain. The company said fourth-quarter production would be weak, due to high cases of COVID-19, battery supply problems, delays in hiring and the implementation of improvements on the shop floor. Shlisky is interested in finding out whether production problems have been resolved and whether the company is still on track to produce 100 vehicles per month by the end of the first quarter. The other important issue concerns the growing competition in the final mile delivery segment. In other words, how does Workhorse plan to stand out in the 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, BrightDrop. In addition, Xos Trucks has just announced that it is going public through a SPAC merger, and also Ree Auto, which can service all types of Class 1-7 commercial vehicles and is scheduled to bring in $ 436 million for your own SPAC merger transaction. “When combined with the mixed readings we have received, at best,” said Shlisky, “We believe that now is not the time to go on the long side for WKHS.” Thus, the analyst classifies WKHS as Neutral (ie Keep), without suggesting a target price. (To see Shlisky’s history, click here) However, Shlisky’s colleagues have a price forecast, and after Tuesday’s massive drop, the average price of $ 22 on Street can yield gains of ~ 47% on next year. The analyst consensus classifies the shares as Moderate Purchase, based on 3 purchases and retentions, each. (See WKHS stock analysis at TipRanks) To find good ideas for trading EV shares for attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that brings together all TipRanks stock insights. Disclaimer: The opinions expressed in this article are exclusively those of the analyst presented. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.