Nikola Corporation (NASDAQ: NKLA) stock fell after Deutsche Bank slashed its price target to $1.50.
Deutsche Bank has adjusted its outlook on Nikola (NKLA), the zero-emission vehicle manufacturer, revising its price target from $2.00 to $1.50 while maintaining a Hold rating on the stock. This adjustment reflects a more cautious perspective on the company’s future performance, with scaled-down expectations for vehicle deliveries and gross margins.
The bank anticipates that Nikola will deliver around 1,100 units by 2025, down from the previously estimated 1,500 units. This revision is coupled with a decrease in gross margin projections, with the margin now expected to be -22% compared to the previous -8%. Analysts at the bank have opted for a prudent stance, preferring to observe the company’s execution throughout 2024 before reevaluating their outlook.
Deutsche Bank has also revised its estimates for Nikola’s profitability timeline, projecting the company to achieve positive gross margins in 2026, a year later than Nikola’s target of 2025. According to the bank’s analysis, Nikola is expected to approach breakeven EBITDA in 2026, indicating a longer journey toward financial stability than initially anticipated.
The bank calculates the newly set price target of $1.50 by applying a 2.5x multiple to its reduced 2025 sales estimates for Nikola, which it has discounted back to 10%. Despite the adjusted expectations and price target, Deutsche Bank advises investors to maintain their positions in Nikola, suggesting a cautious approach to monitor the company’s progress over the forthcoming years.
Nikola (NASDAQ: NKLA) Stock Price Action
NKLA stock plunged 5.43% to close at $0.72 on Monday. The traders had exchanged hands with 89,147,122 (89.14 million) shares compared to the average daily trading volume of 103.62 million.
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