This earnings season has seen some downbeat reactions to some good quarterly statements. On Monday, Workhorse (WKHS) joined the ranks of companies whose stock has tumbled after delivering the quarter’s financials. However, looking at the underwhelming results, the sell-off is not hard to understand.
The electric-truck maker delivered only 6 trucks in the quarter to reach revenue of $0.52 million, missing the consensus estimate by $1.81 million. EBITDA of ($152.7M) was far worse that the Street’s ($16.7M) forecast although that can mainly be attributed to a $136.6 million drop in fair value for the company’s 10% investment in Lordstown Motors.
The outlook isn’t promising, either; management lowered full-year production guidance from 1,800 vehicles to 1,000 vehicles, as the company is still constrained by supply chain issues. Most of the deliveries should take place in the year’s second half, and gross margins are expected to stay negative through FY21 but should swing onto the green in FY22.
On the plus side, Workhorse announced it is entering a strategic partnership with JB Poindexter subsidiary EAVX to jointly develop new vehicles for the last mile delivery market. Workhorse also noted that, year-to-date, it has produced 38 trucks, more than double the number it manufactured in the combined prior three quarters.
However, the lackluster results required a rejig to BTIG analyst Gregory Lewis’ model.
“We lower our 2021 production guidance to ~800 units (20% below guidance) owing to potential supply chain issues and a slower than expected vehicle production ramp,” the analyst said. “While we continue to like WKHS’s position as a first-mover in the last mile delivery space, EV penetration continues to muddle along in fits and starts (think pushing to the right).”
Workhorse stock has taken a hammering this year and is now down by 58% year-to-date. Even after Lewis trimmed his price target from $24 to $20, investors could be pocketing gains of 144% over the next 12 months, should the objective be met. Lewis’ rating stays a Buy. (To watch Lewis’ track record, click here)
Overall, going by the Street’s $15.71 average price target, there’s plenty of upside on the horizon, too. The figure suggests one-year gains of ~91%. Rating wise, the Street’s view is mixed, tilting slightly in the bulls’ favor; based on 4 Buys and 3 Holds, the stock has a Moderate Buy consensus rating. (See Workhorse 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.
