Wedbush’s Dan Ives upgraded the stock to Hold from Sell Sunday evening. His price target went to $25 a share from $15 after downgrading it back in late September, just after Hindenburg Research put out a tumultuous report alleging Nikola [$NKLA] bamboozled investors.
Even so, the report sent the stock into a free-fall from roughly $50 a share earlier in the month to about $21, the day Ives downgraded shares. Nikola hit rock bottom in December at $13.51 a share before bouncing back to its current level of about $23.
Ives foresees less volatile days ahead, noting that “negative catalysts have played out.” Concerns over the short selling report, Nikola’s alliance with Government Motors [$GM], the Badger light-duty truck, and founder Trevor Milton’s shaky exodus are in the rear-view mirror. XPeng’s The Latest EV Maker To Recall Its Cars
“The company’s EV and hydrogen fuel cell ambitions are attainable in the semi-truck market,” Ives added. “Importantly, we also believe in a Biden Administration and Blue Senate the green initiatives domestically will be massive around EV/hydrogen endeavors over the coming years.”
Ives thinks the stock can survive if management delivers on what it has set out to do. He’s keeping a close watch on the progress the company is making on construction of its Arizona manufacturing facility, as well as on funding more hydrogen-related partnerships. Those could turn into deals for the supply of parts, or construction of hydrogen filling stations.
Not only does Nikola want to produce heavy-duty trucks, it also wants to own and operate a network of hydrogen filling stations. Kinda like how Tesla [$TSLA] owns its own network of EV charging stations, although there are big differences between the heavy-duty trucking and personal transportation markets.
Ives had the lowest target price on the Street. That, until he was unseated by RBC analyst Joseph Spak, who rates shares at Hold and has a $17 price target. Overall, two out of seven, or less than 30%, of analysts covering Nikola stock rate shares a Buy. The average Buy-rating ratio for stocks in the Dow Jones is about 57%.
Nikola stock is already up more than 50% YTD. It’s possible that the end of 2020 has alleviated selling to lock in losses for tax purposes by investors who purchased shares before the Hindenburg report.