Workhorse Group is up more than 400% this year. Cowen just nearly doubled its price target anyway

Published Tue, Aug 11 20202:41 PM EDTUpdated Tue, Aug 11 20204:00 PM EDT

(This story is for CNBC PRO subscribers only.) Shares of electric vehicle maker Workhorse Group have gained more than 400% this year amid a surge in investor interest in the space, and Cowen believes the stock can continue to climb higher. The firm reiterated its outperform rating on the company, while raising its target to $20 from $11.50. The new target is nearly 30% above where the stock currently trades. The call comes after the company reported second quarter results on Monday that showed a net loss of $131.3 million for the period due in part to a one-time interest expense of $124.3 million. In the same quarter a year ago the company reported a net loss of $20.1 million. The company also reaffirmed its prior production and delivery target of 300 to 400 vehicles for this year. "After a tough few quarters, we see greener pastures ahead," Cowen analysts led by Jeffrey Osborne said in a note to clients Monday night. "The 2H ramp remains on track," he added. Workhorse is focused on last-mile delivery vehicles, and currently has partnerships with UPS and FedEx Express, among others. Osborne noted that a potential upcoming catalyst for the stock could be an order from the U.S. Postal Service to upgrade its fleet of vehicles. According to Cowen, the company is one of two final contenders for the contract. "A positive outcome for the U.S. Postal Service contract would comfortably lead the company to profitability," the firm said. However, given that it's not yet assured, Cowen hasn't included the upside in its financial targets for the company. Workhorse Group also holds a 10% stake in Lordstown Motors, which last month announced that it will go public later this year through a reverse merger with special purpose acquisition company DiamondPeak Holdings . "The next catalyst for the stock is the commencement of C-series [step vans] vehicle production, followed by progress with the Lordstown Motor Corporation, which we believe will begin in 2H21," Osborne wrote. "While we continue to take a conservative stance, we see a path to profitability in FY22." Workhorse has been public since 2009, but for a while the stock appeared to be on a road to nowhere. That's changed in a dramatic fashion this year, however, as investors pile into the name amid enthusiasm for the broad electric vehicle space. As recently as March the stock traded under $2, before climbing to $22.90 in July. Since then it's lost about 30%, however, and currently trades around $15.80. In addition to Lordstown Motors, EV startup Fisker also plans to go public later this year through Apollo Global Management-backed special purpose acquisition company Spartan Energy Acquisition. Nikola also took this approach, accessing the public market through a reverse merger with VectoIQ, which was completed in June. Workhorse CEO Duane Hughes attributes the sudden spike in his company's stock to a combination of its fundamental business, as well as greater attention paid to the industry more broadly. "There's been a big spotlight shown on the electric vehicle space," he said recently on CNBC's "Fast Money." "It's been really difficult over the years to scream loud enough as an automotive OEM out of Cincinnati to get the attention we feel we deserve based on the performance of our vehicles that have been on the road for more than six million miles ... I would like to think that a lot of it [the stock surge] is because of our performance as a company, but it's also just that people are taking a much higher profile view of the space," he added. Shares of Workhorse finished Tuesday's session slightly higher.

(This story is for CNBC PRO subscribers only.)

Workhorse W-15 Electric Pickup Truck.

Source: Workhorse

Shares of electric vehicle maker Workhorse Group have gained more than 400% this year amid a surge in investor interest in the space, and Cowen believes the stock can continue to climb higher.

The firm reiterated its outperform rating on the company, while raising its target to $20 from $11.50. The new target is nearly 30% above where the stock currently trades.