Nikola falls after JPMorgan warns of pullback

Jun. 22, 2020 8:26 AM ETNikola Corporation (NKLA)NKLABy: Clark Schultz, SA News Editor32 Comments
  • JPMorgan is out with a favorable view on Nikola (NKLA -2.7%) even as it calls shares fully valued for the short term at their current level.
  • "NKLA is poised to disrupt the transportation industry with rapid deployment of hydrogen infrastructure and FCEV powered vehicles for use on long haul trucking routes, reducing CO2 emissions meaningfully and positioning the firm for a key role in the future hydrogen economy," writes analyst Paul Coster and team.
  • "The resulting business model could be compelling, however risks are elevated for this pre-revenue company, and the stock looks fully valued here, so we look for a pull-back or incremental positive developments to get more constructive."
  • As far as numbers, the firm thinks execution of the multi-year Nikola plan could result in $1.5B to $2.0B of EBITDA on nearly $14B of revenue as early as 2027, cumulative contracted lease revenue of ~$30B, ~30% recurring revenue and strong cash flow into 2030s.
  • JP's price target of $45 is based on 30X the 2027 EBITDA estimates of ~$1.7B, discounting to PV market cap using a 20% cost of equity. The PT is well below the average sell-side PT of $79.45. A Neutral rating is assigned to shares.
  • Shares of Nikola are down 2.56% premarket to $64.21.

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