Stocks’ Details

Workhorse Group, Inc.

Q3FY20 Result Highlights: Workhorse Group, Inc. (NASDAQ: WKHS) is an American technology company focused on designing and building high-performance, battery-electric vehicles such as trucks and aircraft. As on 17 November 2020, the company’s market capitalization stood at $2.59 billion. During Q3 FY20, the company reported total sales of $564,707 compared to $4,258 in Q3FY19. Further, the company reported Cost of goods sold of $2.8 million, higher than $1.4 million in Q3 FY19, due to increases in labor and materials relating to costs for the C-Series production. The company’s reported an operating loss of $9.8 million compared to an operating loss of $5.6 million Q3FY19. At the end of September quarter, the company had cash, cash equivalents and short-term investments of $80.2 million.

Q3FY20 Results (Source: Company Reports)

500 truck order from Pritchard Auto Company: The company recently received a purchase order for 500 of its all-electric C-1000 delivery vehicles from Pritchard Auto Company that will be financed by Hitachi Capital America (HCA). This order will help the company in building a nationwide distribution network and expand the number of potential fleet customers.

Outlook: In the first quarter of 2021, the company is expected to have supplemental volume additions. For 2021, the company expects to produce around 1,800 units, subject to COVID-19 situation and its associated impacts.

Stock Recommendation: Through various financings, the company has improved its current cash position to over $260 million. The stock of WKHS has provided a return of 28.17% in the past three months. On the technical analysis front, the stock has a support level of ~$18.57 and resistance of ~$27.13. Considering the long-term prospects for the EV delivery truck market, recently received purchase order from Pritchard Auto Company, rising sales, improved cash position, modest outlook, we are of the view that the stock might see further upside in the coming times. Hence, in the light of above-mentioned facts, we give a “Hold” recommendation on the stock at the closing price of $21.475, up 7.81% on 17 November 2020.

Plug Power Inc.

Commenced $750 million Public Offering: Plug Power Inc. (NASDAQ: PLUG) is a leading provider of comprehensive hydrogen fuel cell (HFC) turnkey solutions. As on 17 November 2020, the company’s market capitalization stood at $9.55 billion. On 16 November 2020, the company commenced a registered public offering of $750 million of its common stock. The company has granted underwriter a 30-day option to purchase up to $112,500,000 of additional shares of common stock. The company will use the proceeds from this offering for working capital and other general corporate purposes, which may include capital expenditures, potential acquisitions, growth opportunities and strategic transactions. PLUG has announced a pricing of an upsized offering of its 38 million shares at a price of $22.25 per share. It is expected that the offering will close on or about November 19, 2020, subject to satisfaction of customary closing conditions.

Q3FY20 Results: For Q3FY20, the company reported gross billings of $125.6 million, up 106% on pcp. During the quarter, the company deployed 4,100 fuel cell systems and 13 hydrogen fueling stations. The company’s proforma Adjusted EBITDA margin stood at 19% in Q3FY20. The company’s results in Q3FY20 were driven by growth in sales, ongoing cost reductions, and the increasing leverage on operating costs.

Q3FY20 Results (Source: Company Reports)

Outlook: Following the decent Q3FY20 performance, the company has raised its FY20 gross billings guidance to $325 million-$330 million from $310 million. The company expects its proforma Adjusted EBITDA margin to reach 20% by 2024. Further, the company is on track to deliver on its 2024 targets of $1.2 billion in gross billings and $200 million in operating income.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: Over the last three months, the stock of PLUG has provided a return of 79.95% and is currently inclined towards its 52-weeks high price of $25.49. On the technical analysis front, the stock has a support level of ~$19.01 and ~$24.32.  We have valued the stock using the EV/Sales multiple based illustrative relative valuation and have arrived at a downside of low single-digit (in percentage terms). For the said purposes, we have considered peers like Fuelcell Energy Inc (NASDAQ: FCEL), Ballard Power Systems Inc (NASDAQ: BLDP), Enphase Energy Inc (NASDAQ: ENPH), etc. Considering the company’s decent returns in the past three months, current trading level and valuation, we give an “Expensive” rating to the stock at the closing price of $22.98, down by 8.08% on 17 November 2020.

Palantir Technologies Inc.

Q3FY20 Result Highlights: Palantir Technologies Inc. (NYSE: PLTR) is a software company involved in developing enterprise data platforms for organizations with complex and sensitive data environments. As on 17 November 2020, the company’s market capitalisation stood at ~$33.52 billion. For Q3FY20, the company reported revenue of $289.4 million, up 52% on pcp. For the nine months ended 30 September 2020, the company’s average revenue per customer stood at $5.8 million, up 38% on pcp. In FY20, the company continued to witness increased demand for its software from customers in both the commercial and government sectors. The company’s loss from operations stood at $847.8 million in Q3FY20.

Q3FY20 Results (Source: Company Reports)

Outlook: The company continues to witness significant momentum in its business across the commercial sector. The company expects its market opportunity in Japan and the broader region to be significant over the long term. For FY20, the company expects its revenue to be in the range of $1.070 billion to $1.072 billion. The company’s adjusted operating income in 2020 is expected to be in the range of $130 million to $136 million. For FY21, the company expect its YoY revenue growth to be around 30%.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: In the last one month, the stock of PLTR has provided a return of 83.83% and has recently touched its 52-weeks high price of $18.75. Catalysts such as increasing demand for the company’s software in both the commercial and government sectors, market opportunity in Japan and the broader region, etc., are likely to support the momentum. We have valued the stock using the EV/Sales multiple based illustrative relative valuation and have arrived at a target price with an upside of high single-digit (in % terms). For the purpose, we have taken peers like Zendesk Inc (NYSE: ZEN), Pegasystems Inc (NASDAQ: PEGA), ServiceNow Inc (NYSE: NOW), Datadog Inc (NASDAQ: DDOG), etc. Although the stock has risen significantly in the past one month period, considering the expected revenue growth in FY21, new contracts, steadily growing demand, we are of the view that stock might see further upside in the coming times. Hence, we are giving a “Hold” recommendation on the stock at the closing price of $17.85, up by 12.05% on 17 November 2020. 

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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