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It is not necessary to catch the fall of the workhorse, says the analyst
The wheels came off the workhorse for Workhorse (WKHS) on Tuesday. After several delays and months of speculation, the US Postal Service has finally decided on who will regain the coveted contract to renew its aging delivery fleet. It was not Workhorse. The $ 482 million ten-year contract has been awarded to Oshkosh, which will now be responsible for assembling 50,000 to 165,000 NGDVs (Next Generation Delivery Vehicle). Investors of the start of the electric delivery van, which is discouraged and deflated, have made the past two trading sessions 52% lower. The rejection is a huge blow to Workhorse, which is considered a forerunner to the award. Production numbers are expected to increase sharply, and the contract is seen as a major catalyst to bring the company forward. So what now? Colliers analyst Michael Shlisky says “investors could be snake-bitten for some time.” ‘It’s important,’ the analyst said, ‘we have never included the USPS RFP (request for proposal) in our valuation of WKHS, simply because the award was always uncertain; as such, we are not currently changing our estimates. Apart from the disappointment of USPS, there are still questions before Workhorse’s Q4 results (3/1). The company said Q4 production would be soft due to increased COVID-19 cases, problems with supply of batteries, delays in renting and the implementation of improvements on the production floor. Shlisky would like to determine whether the production problems have been resolved and whether the company will still be producing 100 vehicles per month by the end of the first quarter. The other important issue is the increasing competition in the last mile delivery segment. Namely, how does Workhorse plan to stand up in the increasingly crowded place? Ford has, as expected, announced its E-Transit model, but General Motors has also announced the launch of a potential competitor for the Workhorse C-650, the BrightDrop. Furthermore, Xos Trucks has just announced that it will publish via a SPAC merger, as well as Ree Auto, which can cater for all types of Class 1-7 commercial vehicles and will raise $ 436 million for its own SPAC merger transaction. “Combined with the mixed reading we received at its best,” Shlisky said, “we believe this is not the time to jump in on the long side for WKHS.” Consequently, the analyst rates WKHS as neutral (ie Hold), without proposing a price target. (To see Shlisky’s record, click here). However, Shlisky’s colleagues have a price forecast, and after Tuesday’s sharp drop, the average price target of $ 22 could yield a profit of ~ 47% in the coming year. The consensus of the analyst assesses the stock a moderate buy, based on 3 buy and own, each. (See WKHS stock analysis on TipRanks.) To find great ideas for EV stocks trading at attractive valuations, visit TipRanks ‘best-selling stocks, a newly introduced tool that unites all of TipRanks’ insights. Disclaimer: The opinions expressed in this article are those of the proposed analyst. The content is for informational purposes only. It is very important to do your own analysis before investing.