Shares of Workhorse Group (WKHS) plunged 8.3% in extended trading after a steep drop of about 47.5% on Tuesday. The immense selling in WKHS stock came after the electric delivery van maker lost a multi-billion dollar U.S. Postal Service (USPS) contract to rival, Oshkosh Corp.
Meanwhile, the USPS contract news pushed up the shares of Oshkosh (OSK) by 7.3% in Tuesday’s extended trading session after closing over 6% higher.
USPS awarded a 10-year contract to Oshkosh’s unit, Oshkosh Defense, to replace the Postal Service’s aging delivery vehicle fleet. Per the contract, “Oshkosh Defense will finalize the production design of the Next Generation Delivery Vehicle (NGDV) — a purpose-built, right-hand-drive vehicle for mail and package delivery — and will assemble 50,000 to 165,000 of them over 10 years.”
The initial investment would be $482 million. According to Bloomberg’s report, the contract could be worth over $5.7 billion in revenues over a 10-year period. (See Workhorse stock analysis on TipRanks)
Notably, speculators and analysts expected Workhorse to win the USPS contract. BTIG analyst Gregory Lewis had said previously that “we are less concerned about when it is announced and more concerned about how much of the contract WKHS wins.” Lewis added, “We continue to view the USPS contract as a significant potential catalyst for the stock.” On Jan. 22, Lewis maintained a Buy rating and a price target of $30 (82% upside potential) on the stock.
Nevertheless, in January, Workhorse won its largest delivery truck order for 6,320 C-Series all-electric delivery vehicles of both C-1000 and C-650 models from the Pride Group Enterprises.
Overall, the rest of the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy consensus rating based on 3 Buys and 2 Holds. The average analyst price target of $26.20 implies upside potential of about 59% from current levels. Shares have skyrocketed by about 348.6% over the past year.
Furthermore, TipRanks data shows that financial blogger opinions are 72% Bullish, compared to a sector average of 69%.
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