Written by Cláudio Afonso | LinkedIn | X
H.C. Wainwright analyst Amit Dayal released on Thursday a new research note lowering the firm’s price target on Canoo to $4 from $7 following the second quarter results published on Wednesday.
Despite cutting the price target by 43%, Dayal has maintained a Buy rating on the shares as the new price target still implies an upside potential of 159.7%.
The analyst cited “changes in the expectations with respect to the company’s production ramp timeline” as it expects now Canoo to start production early next year.
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“We were previously expecting the company to begin initial production in 2H24, but commentary from the 2Q24 earnings call leads us to believe that the production start may now be pushed to early 2025,” Dayal stated.
H.C. Wainwright’s analyst noted that Canoo “has been controlling costs and lowering cash burn” as the company manages its supply chain in preparation for production, which he expects will begin in early 2025.
“The company has been controlling costs and lowering cash burn with operating expenses dropping by $20.7M or 33% sequentially. Management is now guiding for Adjusted EBITDA loss of $120-140M for 2H24. The company highlighted that it is now working towards completing the production setup with the Arrival assets on hand while harmonizing the supply chain with production needs,” the analyst added.
Dayal sees customer vehicle deliveries as the “key catalyst for the stock” while saying that the manufacturer is “continuing to engage with existing and prospective to grow the order-book”.
“Canoo has also received Foreign Trade Zone approval for the Oklahoma City facility. We believe the company is continuing to engage with existing and prospective to grow the order-book. This includes vehicle deliveries to the U.S. Postal Service (USPS), entry into Saudi Arabia, completing Phase 3 milestone with Defense Innovation Unit, and concluding the Red Sea Global pilot. However, we reiterate that vehicle deliveries to customers, in our opinion, remain the key catalyst for the stock. Reiterate Buy rating,” he concluded.
Roth MKM analyst Craig Irwin reduced on Thursday the firm’s price target on Canoo from $3 to $1.50 while maintaining a Neutral rating on the stock.
Canoo’s chief executive Tony Aquila, said the second quarter results represent “good progress” with customers adding that they “drove more than 34,000 recent real world, industrial use miles”.
The stock reached a record low at $1.22 per share in March reflecting concerns over the lack of progress in the pilot programs announced over the last two years.
Written by Cláudio Afonso | LinkedIn | X
