Controversial but red hot electric vehicle stock Nikola gets its first legit Wall Street endorsement

Published Wed, Jun 17 20208:19 AM EDTUpdated Wed, Jun 17 20204:02 PM EDT

(This story is for CNBC PRO subscribers only.) Shares of green truck company Nikola Corporation have more than doubled since it went public through a reverse merger on June 4, despite the fact that the company said it won't generate any revenue until 2021. This has brought out its fair share of critics, with some investors labeling the stock as a purely speculative play. But on Wednesday, the company got its first legitimate Wall Street endorsement when Cowen initiated coverage on the stock with an outperform rating. While acknowledging that it has "sprinted out of the gates as a publicly traded company" and that it's "likely to be a controversial stock in the eyes of many investors," analyst Jeffrey Osborne said the company is well-positioned to capitalize on the transition to cleaner vehicles. "We see Nikola as an intriguing investment opportunity, leveraging one truck platform, 2 power train options and 3 business segments, with optionality in powersports, pickups and AVs," Osborne wrote in a note to clients Wednesday. Nikola, which was founded in 2015, is developing battery-electric and hydrogen-powered trucks . The company's main revenue stream will be semi-trucks, although it's also expanding into consumer vehicles. Osborne said that unlike Tesla, which seeks to build as much as possible in-house, Nikola instead focuses on partnerships for the production of vehicles. This should help the company in actually bringing vehicles to market, which is notoriously difficult. His $79 target, which is 25% above where shares closed on Tuesday, is based on a 5.5X growth multiple, which Osborne said is warranted. "We believe many unique characteristics of Nikola and the scarcity value of the first to market zero emission truck company justify the multiple," he said. "In addition, Nikola is much more than just a trucking company and is really a broad-based energy technology company. The company's 'moat' is above and beyond just selling a truck ... The aim is to sell 'energy as a service' or 'freight as a service' which at first sounds like a bunch of marketing hype, but as investors fully appreciate the differentiated business model, we believe this is unique and extracts more value per truck sold," he added. Nikola founder and executive chairman Trevor Milton said in a recent tweet that the company will open reservations for its upcoming Badger pickup truck on June 29, which Osborne said could be a "catalyst" for the stock. Milton said Monday on CNBC's "Fast Money" that the truck will cost between $60,000 and $90,000, which is steeper than the $39,900 price tag for Tesla's Cybertruck. "We're less than a year out from production and revenue," Milton said. At one point during the trading fren