Workhorse Group (NASDAQ:WKHS) is not an immediately-recognizable name to many out there, but this electric vehicle market player has taken its investors on a wild ride in recent weeks. Surprise ups and downs have been a part of the package for some time now, but some recent news has opened the stock up to a big potential turnaround.
Surprising Setbacks at Workhorse
The biggest hit to Workhorse's recent fortunes came when the company lost a bid to supply electric vehicles to the US Postal Service. The optimist side of the picture expressed itself back in January when Workhorse stock was up 74% at one point on hopes that the company would land such a deal. When the USPS rolled out its choice—Oshkosh (NYSE:OSK)—back in February, that sent Workhorse down on a path that lost it most of the optimism-induced gains the company enjoyed back in January.
However, while the blow of losing the USPS contract was substantial, it didn't destroy Workhorse. Far from it; the company reported quarterly revenue of $652,000, and 2020 sales of $1.4 million. That was well above the 2019 report of $377,000, and that gave investors something of a boost. In fact, recent reports arriving from B.Riley gave investors another small note of hope, as the analyst started coverage on the company with a “buy” rating and a $20 price target.
B. Riley, via analyst Christopher Souther, noted that Workhorse's current plans to get its production lines rolling up—and with it, likely sales—this year gives the company that much extra potential to gain an early foothold in the electric vehicle market. Workhorse will actually be getting into the market ahead of many potential competitors, Souther noted, and Workhorse's ability to put a car out for customers to buy will let it get a piece of market share that will be difficult for other companies to take later. Throw in the fact that Workhorse's line improves on cargo capacity and that makes for a completely separate yet no less vital competitive edge.
An Increasingly Fractious Analyst Picture
Meanwhile, Workhorse is drawing attention from analysts all across the spectrum, who are promptly laying down some very diverse opinions on the stock, as based on our latest research. Workhorse held a consensus “buy” rating until October 2020, when several new ratings showed up.
A year ago, the company had an absolute consensus “buy” rating, because it had just one rating: a “buy”. Six months ago, interest picked up and so did the diversity of opinion, as the company went from just one “buy” rating to three “buy” ratings and two “hold” ratings. A further tectonic shift took place just three months ago, as the picture shifted once more to four “buy”, three “hold” and one “sell”, the first time a “sell” rating had been part of the picture in over a year. Fast forward to today, meanwhile, where we have a consensus “hold” rating thanks to a ratio of five “buy”, four “hold” and one “sell.”
The price target, meanwhile, is currently sitting at an average of $19.13, with a high of $29 and a low of $4.50. Given the company is trading at $12.45 as of this writing, it could go either way.
A Spark of Potential in the Electric Vehicle Market
We all know that electric vehicle stocks have enjoyed something of a renaissance in recent months. With good reason, too; there are plenty of people out there who believe that this is the future of transport, and in some places, it might well be. One key point, however, has emerged of late: there aren't exactly a lot of electric cars on the market for people to actually buy.
Aside from Tesla (NASDAQ:TSLA), most of the electric cars we've been hearing about are more concept than car. If Workhorse can get a car to market, then it's likely to grab up some market share for itself because there just aren't that many publicly available choices. If Workhorse can get an electric car to market that's on par with current car prices—have you priced an electric Ford (NYSE:F) Mustang lately? It starts around $43,000—then that could put it in a real winning slot.
Yes, the loss of the USPS contract was a huge blow to Workhorse. It was a huge blow to everybody who lost out; a contract with the USPS would have been massive. That doesn't mean it's time to count Workhorse out, though; there are other markets to pursue, some of which have been eager to buy an electric car for years. If Workhorse can actually be one of those cars, then it's likely to get in on at least some first-mover advantage and secure itself to a market with customer inertia for some time to come. That's good news for anyone who invests early, and at Workhorse's share prices, this could turn out to be a winner down the line.
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