Workhorse Group Provides Update on Strategic Plans; Shares Plunge 10%

Workhorse Group Inc. (WKHS) plunged to a yearly low of $7.05 after the company provided an update on its operating and commercialization plans to transition from an advanced technology start-up to an efficient manufacturing company. Shares closed down 9.5% at $7.41 on September 22.

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Founded in 2007, Workhorse Group is a designer and manufacturer of drone-integrated electric delivery and utility vehicles. Over the past year, shares have lost 67%. (See Workhorse Group stock charts on TipRanks)

After receiving customer feedback on its C-1000 vehicles’ payload capacity, WKHS identified several enhancements to the production and design of these vehicles. These enhancements are aimed at increasing the vehicles’ payload capacity, and so the company has decided to halt further deliveries and recall 41 of the previously delivered vehicles.

Furthermore, the new leadership team has recognized the need for additional testing and modification of existing vehicles to certify the C-1000 vehicles under Federal Motor Vehicle Safety Standards (FMVSS). The company has filed a report with the National Highway Traffic Safety Administration (NHTSA), with whom it intends to coordinate.

Testing is expected to complete in the fourth quarter of 2021, and WKHS will provide an update in its upcoming third-quarter 2021 earnings call.

Commenting on the operational review of the business, Rick Dauch, CEO of the company, said, “We have identified a number of opportunities to improve our C-1000 series vehicles and are committed to getting these previously delivered vehicles back on the road. Importantly, we remain on track to communicate our new, long-term strategic roadmap to enhance our trucks and operational capabilities on our third-quarter earnings call. We continue to be confident in our ability to be a leading manufacturer of last-mile delivery vehicles over the long term.”

In response to the news, Cowen & Co. analyst Jeff Osborne lowered the price target on the stock to $7.50 from $8.50 while maintaining a Hold rating. This implies that shares are almost fully priced, with 1.2% upside potential from current levels.

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys and 2 Holds. The average Workhorse Group price target of $12.38 implies 67.1% upside potential to current levels.