Nikola (NKLA) - Get Report is "much more than just a trucking company," according to a Cowen analyst, who initiated coverage of the electric-vehicle maker Wednesday with an outperform rating and a $79 price target.
Shares of the Phoenix-based company were climbing 2.3% to $64.26 in premarket trading.
"We believe that Nikola is well-positioned to address the growing need for low emissions and zero-emission vehicles in the Class 8 trucking market," analyst Jeffrey Osborne said in a note to clients. "The company's focus on battery and hydrogen technology and use of strategic partners particularly for vehicle manufacturing should allow for a fairly smooth production ramp, in our view."
Longer term, Osborne added, "we see the company evolving into a more broad-based energy technology company as hydrogen fueling infrastructure is slowly built out."
"While the stock at first glance screens expensive," Osborne said, "we believe the ecosystem the company is leveraging through the use of strategic partners for design, key components and manufacturing should allow a fairly smooth ramp of production of the battery electric truck in the Summer of 2021, followed by a fuel cell variant in early 2023."
In addition, the analyst added, "Nikola is much more than just a trucking company and is really a broad-based energy technology company."
"The company’s 'moat' is above and beyond just selling a truck with the company setting up a hydrogen station network in North America today and likely Europe at some point in the future," Osborne said.
"Nikola has an ambitious roadmap ahead of it seeking to combine low cost renewable energy paired with electrolyzers to create low cost carbon free hydrogen fuel along corridors where dedicated route fleets travel," the analyst said.
Nikola went public earlier this month. The company recently said that reservations for its Badger pickup truck will begin June 29. Osborne said "the Badger is not in our modeling at the moment given the lack of clarity on specifics."