Nikola stock was lower on Monday, following a surge on Friday.
Courtesy Nikola
Nikola investors breathed a sigh of relief after the hydrogen fuel-cell technology company reported a smaller-than-expected first-quarter loss. The battered shares rallied 13% in response to the news on Friday.
Still, Nikola (ticker: NKLA) shares are down about 25% year to date, trailing behind gains in both the S&P 500 and Dow Jones Industrial Average. And despite better- than-expected results, analysts still see headwinds for the company.
RBC analyst Joe Spak said in a Friday research report that while Nikola seems to have some positive traction with customers, the company is also likely to need more capital to complete its development plans. Nikola doesn’t yet generate sales. Spak maintained his Hold rating on the stock, but cut his target for the price to $11 from $15.
Nikola stock was down 4.3% at $11.02 on Monday morning.
Deutsche Bank analyst Emmanuel Rosner also rates the shares at Hold. He cut his target price Monday to $16 from $19 a share, though he said he was encouraged by management’s achievements in following through on its business plan.
Nikola says it has enough batteries to ship 50 to 100 of its first product—the Tre—in 2021. Production of that vehicle, a short-haul heavy-duty truck powered by batteries, should start in the summer.
The most bullish analyst on Nikola stock is J.P. Morgan analyst Paul Coster. He, too, rates the shares at Hold, but his target for the price is $30, the highest on Wall Street. He wrote Monday that while the results were encouraging, they highlight that Nikola is a high-risk, high-reward stock..
Coster has high hopes for the stock, but expects volatility. He noted that while the company has enough batteries for 2021, he said he isn’t sure the supply chain will be ready for the increase in Tre production this coming year. All auto producers are facing a semiconductor shortage. Batteries might be in short supply as more auto makers launch electric vehicles.
Like Coster, Wedbush analyst Dan Ives didn’t change his rating or price target after earnings. He rates shares Hold and has a $13 call on the stock. “Nikola is a story stock and a “prove me” name for now,” wrote Ives in a Monday report.
That’s the prevailing sentiment on the Street. Investors will want to see trucks delivered and orders coming in before the stock can break out of its recent funk.
Overall,, 25% of analysts covering Nikola rates shares Buy, while the average Buy-rating ratio for stocks in the S&P 500 is about 55%.
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