Several upcoming events for Nikola could make the electric-truck startup and potential Tesla rival attractive long term, a Wall Street firm said. Nikola stock soared.
JPMorgan analyst Paul Coster upgraded Nikola stock to overweight while maintaining a price target of 45, after initiating coverage at neutral about two weeks ago.
In a note Wednesday, he listed several near-term catalysts for Nikola, which plans to develop hydrogen fuel-cell electric vehicles (FCEV) and refueling stations as well as battery electric vehicles:
- An announcement of a manufacturing partner for the Badger electric truck.
- A hydrogen station deployment plan for the U.K.
- The EU's plans announced Wednesday to promote "clean hydrogen."
- Potentially accelerated implementation plans for the FCEL truck in the U.S.
- California's Carb Act ruling, which could lead to accelerated adoption of hydrogen infrastructure on the West Coast.
"We think the stock will react favorably to any developments that shorten and/or de-risk the BEV and FCEL truck implementation plans," Coster wrote.
He also warned of volatility in the short term but noted "we are on board as long as the company executes to plan" and offers a favorable risk-reward trade-off.
Shares jumped 34.3% to close at 54.03 on the stock market today, bouncing off a test of the 50-day line on Tuesday. Tesla stock added 0.4% as the electric-car leader dominated China "new energy vehicle" sales in June. Nio reversed lower to end down 2.4%.
Nikola stock debuted June 4 after a reverse merger with VectoIQ, a blank check or SPAC company. The volatility in Nikola stock, largely driven by short-term traders, will continue until SPAC shares are freed up to trade, Coster said.
Nikola stock rallied massively in June as Wall Street took note of its subscription-based "bundled lease" model.
Automakers see electric trucks as a growth area in years to come.
Nikola's Badger battery-electric pickup is a potential rival to Tesla's Cybertruck, due next year. The Badger could also challenge an electric Ford F-150 truck and the General Motors Hummer electric truck, both also due in 2021.
Find Aparna Narayanan on Twitter at @IBD_ANarayanan.
YOU MAY BE INTERESTED IN: