Workhorse: Can a new CEO bring about a turnaround? Analyst weighs in

2021 has given Workhorse headwinds several times (WKHS). First, the electric truck maker lost what appeared to be the stock’s most optimistic driver: a USPS contract to renew the postal service’s aging van fleet; after a grueling process, the contract was awarded to Oshkosh. Then, constrained by supply chain issues, which have been a curse for many this year, the company lowered its full-year 2021 production forecast from 1,800 vehicles to 1,000 vehicles. The stock’s action reflects real-world problems; shares are down 43% at the start of the year.

Last week, the company said it was also taking the revised guideline off the table. Although that may not necessarily be a bearish sign.

The reason for pulling the forecast is due to the reappointment of Rick Dauch as CEO so that the new man at the helm can have some time to determine the best way forward for the ailing company. Dauch takes the reins at the start of the week and brings a lot of experience with him. His most recent role was that of CEO of Delphi Technologies, where he completed a merger with BorgWarner in October 2020, following the completion of a successful spin-off from Aptiv.

“In our opinion,” said B. Riley’s Christopher Souther“Dauch’s experience with turnarounds within the automotive industry makes him a good match for Workhorse as it looks set to ramp up production.”

And therein lies the pinch; Key to a successful start to Dauch’s tenure will be “the processes Dauch is putting in place to achieve Workhorse’s first meaningful foray.” These obviously have consequences for both the company and the shares. Investors will be able to hear his thoughts on this during Workhorse’s second quarter conference call on August 9. Dauch’s comments about how long it will take for Workhorse to produce vehicles “at a meaningful pace” will be vital to the story, Souther says.

“Given the number of new electric commercial vehicle launches expected from major established OEMs and other new entrants over the next 2-3 years, the first mover advantage makes a successful 2H21 disaster key to our buying thesis,” summed up the 5-star analyst. on. upwards.

That Buy rating is backed by a price target of $16, which means stocks will rise 43% over the next year. (To view Souther’s track record, click here)

The Street’s average price target is a more modest $13.25, indicating upside potential of about 18% over the next 12 months. In general, the consensus rating for a moderate buy of the stock is based on buying 2 versus holding 4. (View WKHS stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are those of the featured analyst only. The content is for informational purposes only. It is very important to do your own analysis before making any investment.