Workhorse Group Inc (NASDAQ: WKHS) has made its name on Wallstreet this year as investors took every chance to snap up shares in the electric vechile manufacturer. Workhorse is most commonly known amongst investors for its innovative spin on pick-up trucks and transport vans. The stock has seen incredible growth over the past 3 months, currently upwards of 1,000%. With such uncertainty tainting the markets right now, we will breakdown the key indicators influencing this stock and the long term forecasts for Workhorse moving into 2021.
Table of Contents 1. Introduction 2. Workhorse Group breakdown and key models 3. Workhorse stock outlook for 2021
A breakdown on Workhorse Group (WKHS) and its key business model
The EV industry is dynamically evolving, with the Goliath industry leader Tesla paving the way for EV manufacturers. Workhorse or formally known as AMP Electric Vehicles, is an Electric transport vehicle manufacturer based in Ohio, USA. The company focuses on developing sustainable, innovative and cost effective transportation for businesses in the last mile industry. Led by CEO Duane Hughes, Workhorse has been able to deliver 3 key products that have captivated investor interest:
- C Series 650 and C Series 1000 – These two models of Electric Transport Vans have built-in lightweight bodies and a innovative suspension system. The C series aims to capitalise on the $18 Billion “Last Mile” industry by providing an efficient and cleaner alternative. The C Series gained a partnership with Ryder, via a peer to peer truck sharing platform that rents vehicles to delivery companies. Investors are confident this exposure on Ryder will initate further sales with large transportation corporations.
- The HorseFly UAV – Integrated with the C1000 series, the UAV Horsefly is designed to deliver packages via aviation of a drone. The Horsefly is specifically designed as a innovative and non-instrusive method of delivery. The HorseFly will drastically cut the associated cost of delivery, upwards of 80%.
- Metron – The Metron is designed to track and monitor all Workhorse vechiles operating under an organisation. The software collects data from all trips completed by Workhorse vechiles and maps out faster and more efficient routes.
Workhorse Stock Outlook for 2021
There has been a large divide between the bulls and the bears surrounding Workhorse stock. The Bullish argument suggests WKHS has the potential to capture significant market share of the “Last Mile” industry over time. This argument would also incorporate the benefits Workhorse will experience as society tail winds towards EV.
What are the key positives for Bulls coming into 2021
- The current revenue predictions by analysts for 2021 are very strong. According to Yahoo Finance and Business Insider data, the 2021 revenue outlook is in the ball park of $143 million. This is a suggested 570% gain from the 2020 revenue predictions.
- EPS expected to hit positives by 2022, improving significantly between 2023-2024.
- United States Postal Service are set to finalise a $6.3 Billion contract to revamp the postal delivery vehicles. The award order will account for upwards of 180,000 transport vehicles. Hence, if Workhorse are able to secure this award the stock would likely reach new heights due to the sheer anticipation of this announcement (opinion not advice).
- The recent Hitachi strategic agreement sees Workhorse expanding their operations and supply chain across the United States moving into 2021. Hitachi will provide a strong influence on quality control throughout the manufacturing process.
“This alliance with Hitachi comes at an ideal time for Workhorse as we value their best in class innovation and experience in ramping up production and enabling us in providing a complete solution to our customers.,” said Workhorse CEO Duane Hughes. See full announcement here.
The risks associated with Workhorse stock coming into 2021?
- Average 1 year price targets for WKHS average at $25.50, with high end targets at $33 and low end targets at $20 – according to NASDAQ data. This suggests there is little upside potential over the next 12 months. However, the three month consensus is still a Strong Buy as per 3 analysts inputs on the NASDAQ.
- Current sales and revenue are weak, only posting $92,000 revenue in its most recent earnings announcement. Although sales revenue is likely to increase drastically by next quarter, there is no doubt that the bears can see that this stock as overvalued.
- External market influence will play a role. The Nasdaq and SP 500 have struggled to find an equilibrium with the upcoming election and the possibility of another market downturn. A downturn would shed some weight off the Workhorse stock price. Potentially bringing it down to a price that holds greater upside potential in the long run.
Taking into account the bullish argument, alongside the associated risk for Workhorse we can conclude that the long term (3-5 years) future is bright according to analysts. The revenue forecasts alongside the potential United States Postal Service award are something long term investors are very bullish on. Furthermore, the C series vehicle has the potential to absorb market share in the “last mile” industry (opinion). However, the 12 month price targets show little upside potential at its current share price. Therefore, the timing of entry in this current period of trading will hold the most weight in mitigating the short term risks (overvalue).
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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Written by Tyger Fitzpatrick, Founder of Youth Investment Group.