Workhorse‘s stock after the commercial electric-vehicle maker lost a bid to replace the U.S. Postal Service’s aging fleet of delivery vans. Shares fell more than 50% in the days following the contract award.
Now Workhorse (ticker: WKHS) is meeting with the USPS to discuss the bid.
Workhorse, of course, wants to overturn the award made to truck maker Oshkosh (OSK) or, at least, win part of the yearslong, multibillion-dollar contract. Figuring out if Workhorse will be successful isn’t easy to do.
Wall Street, for its part, isn’t sure how to handicap the process, partly because they were surprised by the USPS decision to begin with. Cowen analyst Jeffrey Osborne expressed that sentiment in a Tuesday research report, “especially given the administration’s stance around government fleets being zero-emission.” The Oshkosh offering, in its initial configuration, is gasoline-powered. “Management was certainly disappointed in the outcome but did not appear to be accepting defeat just yet,” he added.
Oshkosh does plan to offer an EV to the post office, but that was an unexpected revelation coming out of the bid award . Roth Capital analyst Craig Irwin probed Workhorse management about the Oshkosh EV offering on the company’s earnings conference call Monday. “We are not aware of any other [electric] vehicle that went through…the durability testing process,” said Workhorse CEO Duane Hughes. An Oshkosh EV didn’t appear to be tested, but Hughes didn’t know the details of all other bids.
Workhorse appears to have one strong elected advocate. Ohio Congressman Tim Ryan tweeted out Tuesday his concerns with the bid. “The tainted tenure of Postmaster [Louis] DeJoy calls into question the awarding of this contract,” wrote Ryan. “This week’s announcement further calls into question his judgment, his ability to effectively run the USPS, & his short-sightedness at this critical agency. ”
Ryan represents Ohio, the state where Workhorse is based. The USPS didn’t immediately respond to a request about Ryan’s tweet or about the meetings today with Workhorse. Ryan wasn’t immediately available to furth clarify his comments.
DeJoy is the new Postmaster General, taking over the nearly 250-year-old agency in June. He testified before Congress in 2020 about handling of the high number of mail-in ballots amid the pandemic.
BTIG analyst Greg Lewis doesn’t expect much to come out immediately from Wednesday’s meeting. He believes the appeal process could drag out months. Still, he rates Workhorse stock Buy and has a $24 price target.
Osborne rates shares Buy, too, but his price target is a little lower at $18. Irwin, for his part, rates shares Hold and has a $15 price target for Workhorse stock.
Analyst, overall, have gone lukewarm on Workhorse stock. Back in the fall, four out of five analyst rated shares Buy. Now only three out of eight rate shares Buy.
Investors have cooled on shares, too. The stock is off more than 60% from its 52-week high. That leaves shares at levels from this past summer, when thoughts of a USPS bid were barely surfacing—it seems as though investors have taken all USPS value out of the stock. That sets up an interesting trade. Any positive movement from the USPS appeal might help shares.
Workhorse shares are flat in premarket trading. S&P 500 and Dow Jones Industrial Average futures are up about 0.5%.
Write to Al Root at [email protected]
