‘What goes up must come down’ has been the story of Nikola (NKLA) stock over the past year. Initially viewed as a promising EV play, sentiment quickly soured as the electric truck start-up was beset by a series of events which sapped investors’ confidence. In tandem, the share piece nosedived, and is down 80% since last June’s peaks.
That said, over the past month, sentiment toward this controversial company appears to be shifting again and the stock has been picking up steam.
The company has also sharpened its focus, and BTIG analyst Gregory Lewis considers the past year’s events as “growing pains.” The analyst thinks that while expectations should be kept under a lid in the near-term, Nikola’s “dual-pronged strategy of helping transition the heavy-duty Class 8 truck market to battery-electric trucks (BETs) and hydrogen fuel cells (FCEV),” is one investors should keep an eye on.
The Class 8 truck market, says Lewis, is one ripe for disruption. Over the coming decade, Lewis thinks BETs and FCEVs will gain market share with BETs “leading the charge.”
According to the company, its long-term future will be mostly based on its fuel cell business, for which Nikola plans to raise $1 billion this year to further its development.
However, Lewis believes that having a BET solution is a “nice hedge,” and as battery density “increases on its way to a 1MW battery (think 600-mile range,)” is one which its BET solution will benefit from. The Tre BET is expected to enter production later this year, with 14 units already in various stages of Beta testing. However, affected by the industry-wide battery cell shortage, Lewis expects only a handful at best to hit the market in 2021.
Although Lewis anticipates “initial production delays,” the analyst believes 2H22 is when the BET production will kick off in earnest and expects the hydrogen FCEV solution to hit the market by 2024.
Lewis thinks investors should remain patient, as Nikola’s dual product truck offering of BETs and FCEVs “are positioned to replace ICE trucks longer term.”
To this end, Lewis rates Nikola shares a Buy along with an $18 price target. Investors could be sitting on gains of ~17%, should the forecast play out accordingly. (To watch Lewis’ track record, click here)
Turning now to the rest of the Street, where with 2 Buys and 5 Holds, the analyst consensus views Nikola stock a Moderate Buy. The average price target clocks in at $18.67, suggesting one-year gains of ~21%. (See Nikola stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
