Auto industry disruptor Nikola (NKLA) will report 2Q earnings today after the bell. In yesterday’s tech rally, the electric heavy-truck maker surged by 22%.
Was the surge in anticipation of a “home run” report? Hardly. In fact, results wise there will be very little to tell investors, as Nikola has no product yet and isn’t expected to have anything to sell until the second half of next year at the earliest.
However, there were several reasons for the rally. One was a note to investors from Deutsche Bank, in which analyst Emmanuel Rosner added the company to its short-term Catalyst Call Buy List.
Rosner recommends investors pull the trigger on NKLA shares in anticipation of updates from Executive Chairman and founder Trevor Milton.
Maybe Nikola has little to show for now, but Milton has taken a leaf out of the mercurial entrepreneur playbook. The founder has already exhibited all the hallmarks of an adept showman, with a flair for headline grabbing antics. The latest of which was a tweet reassuring investors as to the health of Nikola’s balance sheet. The savvy move helped push the share price higher, too.
So, what does Rosner expect Milton to reveal that instigated the Buy Idea?
“We see catalysts occurring with Nikola’s earnings report this week,” the analyst said, “Including: customers for its BEV truck; commercial partner for the hydrogen stations; OEM manufacturing partner; and an updated Badger reservations count . Beyond it, some or all of the above company updates could come in the next couple months. We are targeting a 10-20% return for this Catalyst Call.”
It will be interesting to see how much battery power there will be left to push shares higher after yesterday’s surge.
To this end, Rosner has a $54 price target on the stock, implying there’s a 42% upside in the cards. Additionally, as mentioned, Rosner’s Hold rating makes a switch to a “short term” Buy. (To watch Rosner’s track record, click here)
There’s similar sentiment among Rosner’s colleagues. 2 Buys and Holds each, add up to a Moderate Buy consensus rating. At $56.67, the average price target could provide gains of 55% over the coming months. (See Nikola stock analysis on TipRanks)
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