A Nikola electric truck cab.
Courtesy Nikola
Wall Street price targets are coming in on Nikola stock following the company’s second quarter earnings report—just as the stock is jumping after a difficult week.
Nikola shares (ticker: NKLA) are up 6.7%, at $10.90, in recent trading. Shares are still down about 23% since July 28, before former CEO Trevor Milton was charged by the Justice Department with securities fraud and before the company reported second quarter earnings Tuesday morning.
Shares closed down 9.7% Tuesday following the report, even as the company reported a smaller adjusted loss than Wall Street expected.
“Nikola delivered its 2Q results which showed tighter cost controls than the Street was anticipating,” wrote Wedbush analyst Dan Ives in a Wednesday report. That’s a good thing. Still, he says “clear challenges remain,” and he cut his price target for Nikola shares to $10 from $13.
Ives rates shares Hold. So does J.P. Morgan analyst Bill Peterson. He cut his price target to $21 a share from $30.
Peterson addressed the lawsuit against Milton in his Tuesday research report, calling it a distraction that might result in a fine for the company. That isn’t why he cut his target, though. He cited production delays due to factors like the global semiconductor shortage hampering auto production everywhere. The supply-chain issues caused the company to reduce 2021 delivery guidance to 25 to 50 vehicles from prior guidance of 50 to 100 vehicles.
Overall, the average Wall Street analyst price target on Nikola dipped to $17 from $18.14 before the second-quarter earnings report. There were no upgrades or downgrades of Nikola stock. Three of eight, or about 38%, of analysts covering the company rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Analyst notes mainly focused on business execution, but the lawsuit against the former CEO remains the elephant in the room. It was addressed on the conference call, but management didn’t say much. “There’s lots of potential distractions out there, and our job is to keep everybody focused on delivering on the milestones that we just overviewed for you,” said CEO Mark Russell on the conference call.
Niklola stock is down 29% year to date, trailing the 17% and 14% comparable respective gains of the S&P 500 and Dow Jones Industrial Average.
Write to Al Root at [email protected]
