On Tuesday, Workhorse Group Inc. (NASDAQ:WKHS) saw its price target significantly reduced by Roth/MKM from the previous $4.40 to a new target of $1.25. The firm has decided to maintain a neutral rating on the stock despite the adjustment in the price target.
The decision comes after Workhorse Group reported a miss in their second-quarter 2024 revenue, primarily attributed to slower than anticipated deliveries. The management of Workhorse Group has indicated that the availability of HVIP (Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project) vouchers played a role in the delivery shortfall.
As of August 12, the number of shares outstanding for Workhorse Group was reported at 24.3 million, marking a 48% increase compared to the 16.5 million split-adjusted shares that were outstanding at the end of March.
Roth/MKM's stance remains cautious, with an emphasis on the need for Workhorse management to reduce equity dilution and to demonstrate improved revenue growth. The analyst firm suggests that these changes are necessary before they would consider revising their rating on the company's stock.
In other recent news, Workhorse Group announced a series of significant developments. The electric vehicle manufacturer secured $4 million in financing, part of a broader securities purchase agreement that could result in up to $139 million in financing.
This move aims to support the company's operational and capital needs. In addition, Workhorse Group implemented a 1-for-20 reverse stock split to meet Nasdaq's minimum bid price requirement, adjusting the outstanding shares accordingly.
Following a revenue shortfall in the first quarter of 2024, Roth MKM lowered its price target for Workhorse Group's shares, emphasizing the importance of minimizing equity dilution and promoting revenue growth. DA Davidson maintained a Neutral rating on the stock, citing the company's cautious approach to disclosing its operational targets and forecasts.
InvestingPro Insights
As Workhorse Group Inc. (NASDAQ:WKHS) navigates through its recent challenges, real-time data from InvestingPro offers a detailed financial perspective on the company's standing. Notably, Workhorse's market capitalization has adjusted to a modest $17.75 million, reflecting the market's current valuation of the firm. Despite the setbacks, analysts have highlighted a silver lining with an impressive 90.1% revenue growth over the last twelve months as of Q1 2024, suggesting potential in the company's ability to scale its sales. However, this growth is contrasted by a quarterly revenue decline of 20.91% in Q1 2024, underscoring the inconsistency in Workhorse's revenue streams.
InvestingPro Tips indicate that Workhorse is trading at a low Price / Book multiple of 0.34, which could signal an undervaluation of the company's assets relative to its share price. Furthermore, two analysts have revised their earnings upwards for the upcoming period, hinting at an optimistic outlook for the company's financial performance. Yet, it's worth noting that Workhorse is quickly burning through cash and has been grappling with weak gross profit margins, which are critical factors for investors to consider.
For investors seeking a more comprehensive analysis, there are over 18 additional InvestingPro Tips available, which delve deeper into Workhorse's financial health and market position. These tips offer valuable insights for those looking to understand the intricacies of Workhorse's stock performance and future prospects.
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