Lightning eMotors (ZEV) is a designer and manufacturer of commercial electric vehicle (EV) fleets.
In Q1, the company reported revenues of $4.6 million, up from $0.7 million reported in the same quarter last year. ZEV reported sales of 31 zero-emission commercial vehicles in Q1.
At the end of the first quarter, the company also completed its Special Purpose Acquisition Company (SPAC) merger agreement with GigCapital3, resulting in gross proceeds of $268 million and net proceeds of $216.8 million added to ZEV’s balance sheet, and GigCapital3 being renamed Lightning eMotors.
At the end of Q1, ZEV had a sales pipeline of $807 million, and the company expects this to grow further this year. The company’s backlog of $169 million at the end of Q1 indicates a jump of a whopping 500% year-over-year.
FY21 Outlook
For FY21, ZEV expects revenues to range between $50 million and $60 million and anticipates sales of vehicles and powertrains of 500 units. The company said in its Q1 press release, “Extreme supply chain shortages will have a significant impact on short-term margin and operating costs, resulting in a small, negative gross margin for the full year.”
However, the company expects margins to improve incrementally from the negative 16% in Q1 over the next three quarters. ZEV expects operating losses to widen in the next few quarters compared to an operating loss of $5.3 million in Q1 as the company invests more in R&D and sales, general and administrative costs rise to scale up the business. (See Lightning eMotors stock chart on TipRanks)
Analyst’s Take
The company is an EV designer and manufacturer that provides complete electrification solutions for commercial fleets based on legacy original equipment manufacturer (OEM) chassis – from Class 3 cargo and passenger vans to Class 6 work trucks and Class 7 city buses and motor coaches.
Three days ago, Oppenheimer analyst Colin Rusch initiated coverage on the stock with a Buy rating and a price target of $15 (64.5% upside potential). Rusch said that since the company serves a wide array of niche end markets, it gives ZEV “a higher margin opportunity with high defensibility”.
ZEV offers electrification solutions through modular proprietary software and hardware that gives it a competitive edge, according to Rusch. The analyst stated, “With its software-enabled platform and integration capabilities, we believe Lightning can bring vehicles across class and duty-cycles to market faster and at a lower cost than its peers. With its modular hardware and software, Lightning is able to select from its code and hardware libraries to suit customers’ needs.”
According to Lightning, its analytics solution shows 25% more efficiency and fleet performance in real-time compared to its competitors. Rusch is positive about this analytics solution and believes that “Lightning Analytics is unique and differentiated in its modularity.”
Valuation
According to Lightning eMotors, the company has currently cornered over half the market share in commercial EVs across classes 3 to 7 based on the trucks shipped in the U.S. last year and in the first quarter of this year.
Rusch perceives ZEV as a leader when it comes to the electrification of class 3 to 7 commercial vehicles.
The analyst added, “With Lightning’s diverse supply chain, demonstrated capability in delivering numerous vehicles types, and optionality on either growing through powertrain development, full vehicle sales, or being a leading integrator of fuel cellbased power systems, we believe ZEV shares offer investors meaningful upside potential.”
Consensus among analysts on Wall Street is a Strong Buy based on 3 Buys. The average analyst Lightning eMotors analyst price target of $14.67 implies approximately 60% upside potential to current levels.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.
