Workhorse Group (WKHS) Stock Forecast: Is It A Buy After A 58% Drop?

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The share price of the electric vehicle manufacturer Workhorse Group Inc. (NASDAQ: WKHS) the past six months is akin to one of the screaming roller coaster rides at the theme park in that sudden upsurges are quick to lead to falls.

The company’s shares soared to over $ 42 in early February after the government promised in late January to move the federal government’s vehicle fleet to an all-electric lineup. However, when a contract was signed for up to 165,000 USPS vehicles under the Next Generation Delivery Vehicle program Oshkosh Corporation (NYSE: OSK) Instead, Workhorse’s stock value fell to less than half that high in less than three weeks.

Today, Workhorse’s stock is back up more than 6% at times. What about this EV company and where is it going in the future? Let’s take a look at it.

Workhorse Group Stock Forecast: What Wall Street Says


Source: Getty Images

Data from CapitalIQ shows Wall Street with an average price target of $ 19.40 for the Workhorse Group. The price targets range from $ 11 to $ 29.

Consensus estimates suggest that Workhorse made $ 1.9 billion in 2025, but those estimates are likely to decline in the coming months as analysts revise their forecasts downward. Could Wall Street target prices near where Workhose stock is traded today miss the potential for rebound?

Sign Workhorse Stock could still be a buy

The major contract with the USPS for a new fleet of delivery vehicles that Workhorse recently slipped through is currently dominating most investor news and prospects about the company.

There is still a small chance that political maneuvers will deliver the contract or any part of it to Workhorse. House Oversight and Reform Committee Chair Carolyn Maloney called for the USPS contract to be released, stating, according to Reuters, that “a thorough review is required to ensure that the procurement process is free from undue influence and potential disruption”. While the likelihood of a reversal is small, it may still exist.

A stronger argument for Workhorse, however, is that the company doesn’t just rely on the USPS order to grow. The company announced another order this year. Despite being significantly smaller than the 165,000 units requested by the postal service, the company received an order for 6,320 delivery vehicles on February 4 from privately owned North American logistics and transportation company Pride Group Enterprises, or PGE Electric Delivery Vans are expected to arrive at PGE in July 2021 , with the entire mission to be completed by 2026.

Since Workhorse has only delivered a total of 370 vehicles in its 14-year history, the order will provide the company with funds if the delivery is successful. It will also demonstrate Workhorse’s ability to successfully build vehicles by the thousands, a data point that may attract new business alongside investor interest. As CEO Duane Hughes notes, the contract “solidifies our first mover advantage and shows the increased interest in our last mile delivery products.”

While the value of the company will not increase on this production, it could mean a breakthrough into larger operations that will increase sales and earnings in the future. In addition, Workhorse has stakes in EV companies Lordstown Motors (NASDAQ: RIDE), a company set to showcase its distinctive all-electric pickup truck at an overland race in Baja California in April and is said to begin production in September.

If Lordstown Motors lives up to its predictions, the close ties between the companies could lead to a surge in equity markets for Workhorse too, especially if the two work together on future EV projects and assignments.

The Bear Case: Why Workhorse Might Be a Sale

Conversely, a bearish scenario could prevail instead if Workhorse’s future depends heavily on the USPS contract. The contract calls for between 50,000 and 165,000 delivery electric vehicles to be delivered over the next 10 years, with an upfront award of $ 482 million for design, factory development and the like. However, with only 370 vehicles produced in its entire history, it remains questionable whether Workhorse could meet the production deadline.

Oshkosh seems more likely to keep the contract despite the current political kerfuffle simply because he can likely deliver. The company already produces large-scale fire engines, armored military trucks and various other commercial vehicles with 14,000 employees.

In addition, the company has 104 years of experience compared to Workhorse’s 14th BTIG analyst Gregory Lewis summarized the situation as follows: “Oshkosh is a real company. They can deliver vehicles, ”reports Bloomberg.

Political opposition to Oshkosh as the winner could also potentially be hampered by more than just practical production considerations, as only 10% of the fleet built by Oshkosh will be electric, the company claims to be able to retrofit its next generation deliveries with electric motors one at a time, eliminating the The Biden administration’s USPS electrification goals are likely to continue to be met.

Conclusion: The WKHS share looks very promising

Investors considering investing in Workhouse Group stocks face a simple dilemma. If Workhorse’s success depends in whole or in part on the USPS Next Generation Delivery Vehicle, its future looks bearish as Oshkosh is the preferred company for keeping the postal service contract. However, if Workhorse can start generating revenue from other sources, it could be one of the winners of the EV boom, even if it stays in the smaller, more specialized commercial vehicle sector.

While the stock is volatile and some of its potential remains opaque until Workhorse actually proves capable of making thousands of vehicles on time, the bull case appears to be a bit stronger. The order of 6,320 vans for PGE is a more realistic initial delivery for Workhorse than 165,000 electric vehicles to the USPS and provides the company with valuable experience in larger scale production and proves its profitability to both customers and investors.

The fact that Workhorse is up over 6% in the news today Volkswagen (OTC: VLKAF) announces plans to cut battery construction costs by 50% as part of its Battery Day presentation, proving that the Workhorse Group is another player in a fast-growing space outside the narrow confines of the USPS mandate can attract positive attention in the stock markets. and is worth a look by investors interested in EV stocks.

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