Fisker (FSR +0.00%) stock investors have had a rough week so far. But don't worry. It's getting better on Friday.
The week started out rough for investors in this electric car company, with a pair of Wall Street banks (R.F. Lafferty and Evercore ESI) tag-teaming the stock with, first, a downgrade to "in line" and then a price-target cut. Over the ensuing days, Fisker stock dropped 15% below last Friday's close. But today, all of a sudden, Fisker stock has turned around and headed higher, rising 8.2% through 1:30 p.m. ET.
And you can thank Citigroup for that.
OTC: FSR
Key Data Points
Bad news could be good news for Fisker
Monday's downgrades featured criticism of Fisker's move to cut its production target for this year to 10,000 units produced, as well as a prediction that Fisker's 2023 earnings before interest, taxes, depreciation, and amortization (EBITDA) will be about 40% below previous predictions at $103 million (and with no actual generally accepted accounting principles [GAAP] profits, natch).
And yet, there was something curious about those downgrades: Despite criticizing Fisker's performance, Evercore nonetheless valued the stock at $2 a share, while Lafferty assigned the stock a $3 price target. Both targets were above the company's sub-$2 share price at the time.
Today's news is similarly of the bad-good variety. As TheFly.com reports, Citigroup analyst Itay Michaeli has just lowered his price target on Fisker stock...but only to $4. This new price target is not only higher than the targets Evercore and Lafferty assigned earlier in the week; with Fisker stock currently still selling for only about $1.60 a share, Citi's price-target "cut" actually implies that the banker thinks Fisker stock can more than double over the next 12 months!
Is Fisker stock a buy?
So you can see why that might get investors excited: Two dollars, $3, $4 -- these may not be great numbers relative to the $7 that Fisker started out the year trading at. But they're all a whole lot higher than what the stock costs today -- and they're trending higher as time progresses.
That being said, before you get too excited about today's news, it's worth highlighting that up until yesterday, Citi thought Fisker stock was worth $10 per share -- and it's been very wrong about that. The analyst admits to disappointment over the company's performance to date and says Fisker management needs to "rapidly work to restore investor confidence from these setbacks."
In that vein, company CEO Henrik Fisker said earlier this week that Fisker has already begun delivering EVs to buyers in Oklahoma and New York, and will provide an update on how sales are going later this month. Meanwhile, the company is still carrying twice as much debt as it has cash on hand and burning cash so fast that it will probably run out in less than a year.
Optimistic price targets notwithstanding, I fear time is running out for Fisker.
