On Thursday, DA Davidson updated its stance on Nikola Corp . (NASDAQ:NKLA) shares, significantly increasing the price target to $12 from the previous $1, while maintaining a Neutral rating on the stock.
The adjustment reflects recent corporate developments, including a 1-for-30 reverse stock split and second-quarter shipment figures that surpassed expectations.
Nikola Corp. recently reported the deployment of its inaugural hydrogen fuel-cell truck and the establishment of its first hydrogen station in Ontario Province.
In the second quarter, the company sold 72 hydrogen fuel-cell trucks, exceeding the analyst's forecast of 50 units. This performance contributed to the revised price target.
During a recent discussion with Nikola's CEO Steve Girsky, the analyst noted Girsky's pronounced confidence in the company's prospects for 2027, particularly in light of tightening diesel emissions regulations. This optimism is reflected in the updated price target.
Despite the new price target indicating a substantial potential increase from the current stock price, DA Davidson advises caution. The firm acknowledges the risks that lie ahead for Nikola Corp. and, therefore, maintains a Neutral stance on the company's shares.
The revised price target and maintained rating come as Nikola Corp. prepares to release its second-quarter earnings, with the market anticipating the company's financial performance and strategic direction.
InvestingPro Insights
As Nikola Corp. (NASDAQ:NKLA) navigates its path forward, the latest data from InvestingPro offers a nuanced view of the company's financial health and market performance. With a market cap of $331.45 million and a price-to-book ratio in the last twelve months leading up to Q1 2024 at 0.57, Nikola appears to be trading below its book value, suggesting that the market might be undervaluing the company's assets relative to its share price.
However, the company's significant cash burn, indicated by a gross profit margin of -762.26% and an operating income margin of -1957.07% in the same period, underscores the challenges it faces. These figures are reflective of the substantial costs that Nikola is incurring as it scales up operations and invests in its hydrogen fuel-cell technology. Furthermore, with analysts not expecting profitability this year and the stock experiencing high volatility, as evidenced by a 1-week price total return of -14.17% and a 1-year return of -88.94%, investors are cautioned to consider the inherent risks.
InvestingPro Tips highlight that while Nikola holds more cash than debt, suggesting a degree of financial stability, it is also quickly burning through cash. Additionally, the company's stock has been trading near its 52-week low, which could be of interest to value investors looking for potential turnaround stories. For those considering an investment in Nikola, there are 19 more tips available on InvestingPro, which could offer deeper insights into the company's valuation and prospects.
As Nikola progresses, these financial metrics and InvestingPro Tips can help investors gauge the company's potential as it aims to capitalize on the shift towards cleaner transportation solutions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.