XL Fleet Corp (NYSE: XL) first caught investors interests in the peak of the 2020 SPAC hype. The company completed their SPAC merger with PIC and are now listed on the NYSE. Since then XL Fleet has been pummelled by shorts, with the stock down 60% over the past 12 months. The stock peaked at $35 a share in late December however since then the company has struggled to reach its PIPE offering valuation. So what went wrong for XL Fleet, and is there a bull thesis over the longer term. This article will dive into the XL Fleet Stock Forecast over the coming years.
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What does Wallstreet have to say about XL Fleet stock?
Shortly after the companies merger, the average valuation from Wallstreet was hovering around the $30 mark.However since then, analysts have turned conservative with an average price target of $8 a share. The most recent coverage was from Canaccord Genuity analyst Jed Dorsheimer. The analyst downgraded XL Fleet to Hold with a price target of $6.
Dorsheimer raised concerns regarding the companies share lockup expiry in Q4. The lock up terms were set out when XL Fleet merged with PIC, meaning insider shares and PIPE investors have remained unable to sell shares until December 21.
Why is this a problem? With almost half the shares outstanding in lock-up, when this reaches expiry we can expect a surge in shares sold to the market. This tends to drive the share price lower as more shares enter circulation to the public market.
Earlier this year, BTIG analyst Gregory Lewis lowered their valuation on XL Fleet to $12 while maintaining a buy rating. At XL Fleet’s current valuation, the target represents a hefty 130% upside. At the time of coverage, the analyst forecasted $44 Million in revenue for FY21. Since this target was released, analysts are now forecasting XL Fleet to generate a quarter of that, $12.78 Million.
XL Fleet lands breakthrough military contract
This week, XL Fleet landed a military contract from the Defense Innovation Unit and U.S. Army’s Project Manager Transportation Systems to prototype a fuel-saving technology for military vehicles. The company was one of two awarded a contract to develop a pilot technology project over the course of the next 12 months. Following a long drought of losses, the news sent XL Fleet stock trading 35% higher intraday.
The technology XL Fleet will be developing will have application for thousands of existing military vehicles. It is unclear at this stage how much revenue the contract will bring to XL Fleet. Nevertheless, the pilot program began on October 1, 2021 and is already underway.
“XL Fleet’s proven technology, flexible platform and deep experience in applying sustainable technologies to fleet vehicles make us an ideal fit for the U.S. military’s specialized needs for this project. We can help extend the operational range of their tactical vehicles, while supporting our troops’ safety and providing significant fuel and operating cost savings and reducing greenhouse gas emissions.”said Tod Hynes, Founder and President of XL Fleet
Summary – XL Fleet Stock Forecast
In conclusion, XL Fleet stock is currently lacking confidence from both Wallstreet and the wider market. The revenue guidance has also dramatically lowered over the course of 9 months. Despite this, at XL Fleet’s current valuation, even the lowest valuations on the street represent a 25% upside from the current trading price.
It would be wise to remember the companies lock-up expiry which is due on December 21. We have seen companies plummet following the lock-up expiry and is always something to be mindful of as an investor.
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The content above is strictly for informational purposes only and is not financial advice nor does it constitute a recommendation. 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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