Stock Analysis & Ideas

Nikola Stock Stands to Benefit From Hydrogen Adoption, Says Analyst

Although it was always anticipated that hydrogen would benefit in the long run from the current energy transition, worries regarding energy security and higher commodity prices are expected to accelerate the adoption of hydrogen on a larger scale in Europe and Asia. As for the U.S., recent government incentives – the Inflation Reduction Act includes up to $3/kg of tax credits for green H2 – point to green hydrogen demand in the US also being pulled forward.

So, hydrogen industry participants will reap the rewards, and BTIG analyst Gregory Lewis thinks Nikola (NKLA) is “well positioned to benefit from increasing demand to decarbonize the Class 8 truck market.”

Nikola’s business has two main elements: there’s the Tre battery electric vehicle (BEV), for which deliveries begun earlier this year with the company targeting deliveries in the 300 – 500 range in 2022.

Next year, however, should see the roll out of its FCEV (fuel cell electric vehicle). Meanwhile, the company is also developing its North American H2 fueling infrastructure network (although there aren’t any stations yet).

Later this month at the IAA Transportation truck show in Germany, Nikola intends to exhibit its FCEV prototype with first deliveries slated for late 2023 in the U.S. and in Europe the following year.

“Hence,” says Lewis, “we like NKLA’s dual pronged approach of targeting their Tre BEV for the roughly 1/3 of the Class -8 truck market that largely operates in urban environments (think only travel a few hundred miles per day) while leveraging its hydrogen network for the long-haul trucking side.”

That said, while Lewis is “bullish” on H2 adoption, he does note that it’s still early days for the hydrogen industry.

Nevertheless, the H2 opportunity is enough to merit a new rating; Lewis upgrades NKLA’s from Neutral to Buy and sets the price target at $12. The implication for investors? Upside of a handsome 159% from current levels. (To watch Lewis’s track record, click here)

Overall, there are 5 recent analyst reviews on record for this stock, and they include 2 Buys and 3 Holds – for a Moderate Buy consensus rating. The stock is priced at $4.61 and its $9.50 average price target implies ~105% upside on the one-year horizon. (See Nikola stock forecast 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.

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