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Nasdaq Stays Flat as Workhorse Drives Higher, Editas Sinks

By Dan Caplinger - Apr 16, 2021 at 3:31PM

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Investors are trying to figure out which stocks have the best prospects.

The stock market moved higher again on Friday, although the Nasdaq Composite (^IXIC 0.90%) struggled to climb into positive territory. As of just before 3 p.m. EDT, the Nasdaq was up less than 0.1%.

Investors have been happy with the returns that the Nasdaq and other major market benchmarks have generated over the past year, but they've been increasingly nervous about whether the stock market is moving into bubble territory. That makes smart stock-picking more important, as news items can push a stock significantly higher or sharply lower. Today, Workhorse Group (WKHS 0.00%) and Editas Medicine (EDIT 6.42%) are showing investors two sides of a very similar coin, even though they're in very different areas of the market.

Workhorse is galloping ahead

Shares of Workhorse Group were up almost 15% on Friday afternoon. The electric truck specialist got a favorable comment from Wall Street analysts that made investors happier about the company's prospects.

Workhorse white delivery van on a street.

Image source: Workhorse Group.

Analysts at B. Riley started their coverage of Workhorse with a buy rating. They set a price target of $20 per share for Workhorse stock. The analysts argue that Workhorse should still see heavy demand for its trucks in the long run, even if the electric truck company fails to have the U.S. Postal Service reverse its decision to award a contract for mail delivery vehicles to a rival provider. In B. Riley's view, Workhorse has a first-mover advantage, and its truck design offers attractively large cargo capacity for those seeking to deliver goods.

Workhorse has had a tough couple of months. Losing the USPS bid was a big blow to its prospects, as many believed that the company was a natural fit for the contract. Moreover, as the electric vehicle industry gets more crowded, it's becoming more and more vital for Workhorse to sustain positive momentum in its business to stay ahead of potential rivals.

Even with today's gains, shares of Workhorse are still down by two-thirds from their highs. It'll take a big business win somewhere for shareholders to get enough confidence to start sending Workhorse's stock price back toward its best levels of the past year.

Editas looks anything but healthy

Meanwhile, Editas Medicine lost nearly 15% Friday afternoon. The gene-editing company found itself on the other end of the analyst spectrum, getting negative comments from a prominent giant in the financial industry.

Goldman Sachs started coverage of Editas with a sell rating and put a $20 per share price target on the stock. That was less than half where the stock closed on Thursday. Goldman argued that even with Editas having lost more than half of its value in the past several months, the risks involved in its business outweigh potential rewards.

Editas has had some execution difficulties lately. Departures of the CEO and chief scientific officer caused some consternation among shareholders. Some are optimistic about its pipeline of treatments for sickle cell disease and some rare eye and blood disorders, but it'll be a while before clinical trials produce results that investors can look at for evidence of future prospects.

The biotech industry is always risky, and Editas has seen its stock give up most of its huge gains since December 2020. The company could bounce back, but it might be a long time before Editas reaches the levels it soared to just a few months ago.

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Stocks Mentioned

Workhorse Group Inc. Stock Quote
Workhorse Group Inc.
$2.60 (0.00%) $0.00
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
$299.23 (0.74%) $2.21
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,127.85 (0.90%) $99.11
Editas Medicine, Inc. Stock Quote
Editas Medicine, Inc.
$12.59 (6.42%) $0.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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