Workhorse vans are larger and more similar to ones that consumers are familiar with.
Courtesy Workhorse
Stock in electric commercial vehicle maker Workhorse was soaring Friday after a new upbeat take from Wall Street.
B. Riley analyst Christopher Souther launched coverage of Workhorse Group (ticker: WKHS) with a Buy rating and $20 price target. His recommendation had shares up 13.2% in midday trading to $13.19.
Souther believes Workhorse has a useful first-mover advantage with all-electric delivery vans and can benefit as it ramps up production this year. There are a few delivery vans on the market, but Workhorse’s are larger and more similar to a FedEx (FDX) or United Parcel Service (UPS) truck that consumers are familiar with. That makes Workhorse offerings unique.
Wall Street, including Souther, projects about $110 million in sales for 2021, up from just less than $1.4 million in sales reported in 2020.
That growth is impressive, but company hit a bump in the road this year after the U.S. Postal Service chose Oshkosh (OSK) over Workhorse to replace its aging delivery trucks. The decision confused many because the Biden administration plans to electrify the federal fleet of vehicles and Workhorse was the only all-EV maker bidding for the contract. Oshkosh’s initial trucks won’t be battery-powered.
Workhorse and some in Congress are challenging the award.
The market, however, isn’t putting a high probability of their success, though. Shares are down more than 30% year to date and more than 40% over the past three months.
The USPS bid loss led to stock downgrades and a dramatic reduction in analyst price targets. Coming into 2021, four out of seven analysts covering Workhorse stock rated shares Buy. The average analyst price target was about $25 a share. Today, with the new Buy rating, 50% of analysts, or four out of eight, now rate Workhorse stock Buy. The updated average analyst price target is $19.50 a share, edging up slightly after Souther’s target.
The average Buy-rating ratio for stocks in the Dow and S&P, by comparison, is about 56%.
Looking ahead, like today’s trading action shows, investors can expect volatility in Workhorse shares as the company’s ramps production and seeks clarification about the future of its USPS bid.
Write to Al Root at [email protected]
