Nikola (NASDAQ:NKLA) has been getting little love from investors in 2024. The stock is down by 69% so far this year, marking a continuation of a multi-year downtrend for the hydrogen fuel-cell truck maker.
But could it be time to take a fresh look at this once-controversial company? Baird analyst Ben Kallo thinks so, as he positions himself squarely in the bull camp following Nikola’s Q2 report.
“We see long-haul trucking as one of the best use cases for hydrogen and expect that the market will expand as fleets, states, and other parties seek to achieve emissions goals for transportation,” Kallo said. “NKLA has a first-mover advantage in this still nascent market, and we believe it is positioned well to capture growing demand as it ramps production capacity.”
Driven by sequential increases in average selling prices (ASPs) as it scales up capacity to meet the rising demand for its FCEVs, Nikola delivered record quarterly revenue of $31.32 million, amounting to a 103.9% year-over-year increase while beating the Street’s forecast by $5.13 million. On the bottom-line, adj. EPS of -$2.67 also fared better than the analyst’s forecast – by $0.06.
Meanwhile, the expansion of its hydrogen fueling network is progressing, with the company on course to reach its target of 14 stations by year-end (seven commissioned year-to-date), which Kallo views as crucial for driving adoption.
The key point for the second half of the year, however, remains the cash burn and “liquidity position.” The company saw out the quarter with $256.3 million in unrestricted cash and equivalents, quite a drop compared to the $345.6 million recorded at the end of Q1. On this, Kallo notes that Nikola is capable of generating liquidity via “1) a sale leaseback of its Coolidge facility, 2) potential grants and incentives (which it has recently gained traction with), 3) monetization of a non-core asset, or 4) opportunistic capital markets activity.”
All told, Kallo rates NKLA shares an Outperform (i.e., Buy), along with a $14 price target, suggesting shares will rebound 66% over the next 12 months. (To watch Kallo’s track record, click here)
Among Kallo’s colleagues, only one other analyst shares his bullish outlook. With 4 additional analysts rating NKLA as a Hold (i.e. Neutral), the stock ekes out a Moderate Buy consensus rating. The average price target stands at $16, suggesting a possible 99.5% return over the next 12 months. (See Nikola stock forecast)
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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.
