Nikola (NASDAQ:NKLA) is a company I’ve had on my radar for some time. Indeed, at these levels, NKLA stock has certainly intrigued me as a potentially lucrative speculative bet in the world of electric vehicles (EVs) and hydrogen-powered vehicles.
Today, analysts seem to agree. A notable “outperform” rating from analyst Ben Kallo at Baird today, along with a $2 price target, appears to be driving this stock higher. At the time of writing, NKLA stock has surged more than 6%, as investors price in whether this selloff may be overdone.
Now, Nikola’s stock price has remained highly volatile, and shares are still within penny stock territory, meaning some work will need to be done in order for a reverse split to be avoided. However, today’s move toward 70 cents per share is positive, and this analyst notes it is worth diving into.
So, let’s do just that.
NKLA Stock Surges on Positive Analyst Outlook
Analyst ratings can be important for various reasons. For instance, they can reveal stocks that are not widely covered and have had a bearish trend but now receive a positive rating from an analyst. This can result in a significant increase in the stock price to reflect its true value.
Baird analyst Ben Kallo said in his note that he believes the future for zero-emissions trucking could be a massive market, with Nikola potentially holding a strong position in this niche. His view is that Nikola’s “proprietary design and software are key differentiators vs. traditional diesel trucks.” This implies that Nikola may have some durable competitive advantages in this nascent space, which many investors may be too quick to avoid.
Some cleanup in the company’s C-suite and other catalysts like federal incentive programs and hydrogen adoption could drive a bid in this beaten-down stock. Additionally, the company’s cash burn rate could improve, and there’s the potential for Nikola to make a strong push for profitability sooner than expected. These are certainly key catalysts bulls will be paying attention to.
Now, while the story may take some time to unfold with Nikola, if the company’s revamped management team can make progress on its ambitious goals, this is a beaten-down stock I can get behind. I do think there’s a bull thesis worth exploring here, and I would recommend investors intrigued by the company to take a look at this note.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
