Nikola Corp. Receives Positive Analyst Coverage

by Warren Seah

Nikola Corp. has caught the attention of analysts as Baird Equity Research initiates coverage on the electric-truck maker with an outperform rating. The stock has experienced a notable increase in value.

Optimistic Outlook for Nikola

Baird analyst Ben Kallo, in his research note titled “When the going gets tough, the tough get going,” set a price target of $2 per share for Nikola. The leadership transition in August, with former General Motors Co. executive Steve Girsky taking over as chief executive, is seen as a positive development for the company, according to Kallo.

“We see significant potential in the market for zero-emissions trucking and believe NKLA has finally found the right management team to capitalize on the opportunity,” he stated.

Key Differentiators and Potential Catalysts

Nikola’s assets, which include proprietary design and software, are considered “key differentiators” when compared to traditional trucks. Kallo emphasizes that the proprietary software installed in NKLA’s trucks is often undervalued but contributes significantly to their value proposition.

In addition, Kallo identifies several “potential catalysts” that could further drive growth for Nikola. These include manufacturing improvements, customer and partnership announcements, as well as the expansion of hydrogen infrastructure for their hydrogen-powered trucks. It should be noted that the company also manufactures battery-powered trucks.

Liquidity Concerns Addressed

Kallo expresses a cautious stance regarding Nikola’s cash burn and liquidity. With approximately $617 million currently available and an expected spending of around $540 million in 2022, he believes that the company will seek additional funding in the intermediate term to bolster its liquidity position and bridge the gap to breakeven.

Future Plans for Nikola

Looking forward, Nikola is anticipated to announce the appointment of a new financial chief as part of Girsky’s team. Additionally, the company plans to reveal new customers and production updates, which are deemed as significant developments to monitor, according to Kallo.

Despite its recent struggles, with Nikola’s stock declining by 73.7% in the past year, there is cautious optimism in the company’s ability to leverage its innovative offerings and capitalize on the evolving market of zero-emissions trucking.

Also read: Nikola’s stock up on deal for hydrogen-fuel infrastructure

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