SIMPLY
WALL
st
Earnings
Release: Here's Why Analysts Cut Their Nikola Corporation (NASDAQ:NKLA)
Price Target To US$2.33
11 May
2023
By
Simply
Wall St
![](images/images_06_27_2023/pic1.png)
It's shaping up to be a tough period for Nikola
Corporation (NASDAQ:NKLA),
which a week ago released some disappointing quarterly results that
could have a notable impact on how the market views the stock. The
numbers were fairly weak, with sales of US$11m missing analyst
predictions by 10.0%, and (statutory) losses of US$0.31 per share
being slightly larger than what the analysts had expected. Earnings
are an important time for investors, as they can track a company's
performance, look at what the analysts are forecasting for next year,
and see if there's been a change in sentiment towards the company.
We've gathered the most recent statutory forecasts to see whether the
analysts have changed their earnings models, following these results.
![](images/images_06_27_2023/1683800504368.png)
NasdaqGS:NKLA Earnings and Revenue Growth May 11th 2023
Taking into account the latest results, the consensus forecast from
Nikola's seven analysts is for revenues of US$154.5m in 2023, which
would reflect a sizeable 157% improvement in sales compared to the
last 12 months. Losses are supposed to decline, shrinking 16% from
last year to US$0.97. Before this earnings announcement, the analysts
had been modelling revenues of US$151.7m and losses of US$1.08 per
share in 2023. Although the revenue estimates have not really changed
Nikola'sfuture looks a little different to the past, with a cut to the
loss per share forecasts in particular.
Even with the lower forecast losses, the analysts lowered their
valuations, with the average price target falling 26% to US$2.33. It
looks likethe analysts have become less optimistic about the overall
business. The consensus price target is just an average of individual
analyst targets, so - it could be handy to see how wide the range of
underlying estimates is. The most optimistic Nikola analyst has a
price target of US$4.00 per share, while the most pessimistic values
it at US$1.00. So we wouldn't be assigning too much credibility to
analyst price targets in this case, because there are clearly some
widely different views on what kind of performance this business can
generate. As a result it might not be a great idea to make decisions
based on the consensus price target, which is after all just an
average of this wide range of estimates.
One way to get more context on these forecasts is to look at how they
compare to both past performance, and how other companies in the same industry are
performing. The analysts are definitely expecting Nikola's growth to
accelerate, with the forecast 253% annualised growth to the end of
2023 ranking favourably alongside historical growth of 136% per annum
over the past three years. By contrast, our data suggests that other
companies (with analyst coverage) in a similar industry are forecast
to grow their revenue at 4.8% per year. Factoring in the forecast
acceleration in revenue, it's pretty clear that Nikola is expected to
grow much faster than its industry.
The Bottom Line
The most obvious conclusion is that the analysts made no changes to
their forecasts for a loss next year. Happily, there were no major
changes to revenue forecasts, with the business still expected to grow
faster than the wider industry. Furthermore, the analysts also cut
their price targets, suggesting that the latest news has led to
greater pessimism about the intrinsic value of the business.
Following on from that line of thought, we think that the long-term
prospects of the business are much more relevant than next year's
earnings. At Simply Wall St, we have a full range of analyst estimates
for Nikola going out to 2025, and you can see
them free on our platform here..
Don't forget that there may still be risks. For instance, we've
identified 5
warning signs for Nikola (2 shouldn't be ignored) you
should be aware of.
Green Play Ammonia™, Yielder® NFuel Energy.
Spokane, Washington. 99212
www.exactrix.com
509 995 1879 cell, Pacific.
exactrix@exactrix.com
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