Workhorse Sheds Gains As 4Q Sales Miss Estimates

Workhorse Group closed 7.2% higher on Monday after the electric delivery-van maker surprised investors with a 4Q net profit while analysts were anticipating a loss. However, shares shed some of their gains and were down about 2.4% in Monday’s extended trading as 4Q sales were significantly behind analysts’ estimates.

The company reported net income of $280.5 million in 4Q, compared to $655,000 in the prior-year period. Analysts were anticipating a net loss of $15.1 million. The bottom-line benefited from the significant growth in other income related to its investment in Lordstown Motors Corp. (RIDE).

Workhorse’s (WKHS) 4Q sales grew to $652,000 from the year-ago period’s sales of $3,000, reflecting a higher volume of trucks produced and delivered. However, sales fell well below the Street’s estimates of $1.2 million. 

The company has a backlog of over 8,000 vehicles, which includes purchase orders from Pritchard Companies in Nov. 2020 and from Pride Group Enterprises in Jan. 2021.

Workhorse CEO Duane Hughes said, “We’re entering the new year in our strongest-ever position, both financially and operationally.” However, he also added that “We are currently faced with various supply chain challenges, both internal and external, in the ramp-up to our stretch production goal for 2021.” (See Workhorse Group stock analysis on TipRanks)

Last week, Workhorse shares plunged over 50% after losing a U.S. Postal Service (USPS) contract to rival, Oshkosh Corp. (OSK). During the earnings call, Hughes said that “This was not the result we had anticipated or hoped for.” He further added that, “we will continue to work with the postal service according to the terms of our engagement as we move forward. To be clear, we intend to explore all avenues that are available to us.” Notably, the company has scheduled a meeting with USPS on March 3.

Following the results, Oppenheimer analyst Colin Rusch maintained a Hold rating on WKHS stock. In a note to investors, the analyst said, “We continue to see strong demand for last-mile delivery EVs [electric vehicles] and believe WKHS has maintained a strong product position. We see significant potential for new order announcements in coming months as buyers get in queue for vehicle deliveries.”

Rusch however added, “As WKHS continues to seed the market while working to ramp up volume manufacturing, we believe the company is continuing to experience typical ramp challenges.” Rusch remains “on the sidelines, pending an acceleration in vehicle deliveries.”

Turning now to the rest of the Wall Street community, WKHS has a Moderate Buy consensus rating based on 2 Buys and 3 Holds. The average analyst price target of $20.25 implies about 17% upside from current levels. Shares have skyrocketed over 476% over the past 12 months.

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