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Why a J.P. Morgan Analyst Finds Nikola Stock Attractive

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Nikola (NASDAQ:NKLA) stock closed 34.3% higher on Wednesday and ended the trading day at $54.03. The sudden jump came after a five-day sell-off in the stock. The company’s shares surged after a Wall Street analyst upgraded the stock. Notably, Nikola stock has risen over 59% since it made its NASDAQ debut on June 4. At Wednesday’s closing price, Nikola’s market cap was $19.5 billion.

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Why did Nikola stock rise?

On Wednesday, J.P. Morgan analyst Paul Coster upgraded Nikola stock to “overweight” from “neutral.” However, he reiterated the target price at $45. Currently, the target price is at a discount of 16.7% to the current price of $54.03. According to the analyst, Nikola stock could be an attractive investment option for long-term investors. Coster is bullish on the company due to its attractive valuation. 

In a report from The Fly, Coster foresees a “number of potential positive catalysts in coming weeks and months.” Notably, J.P. Morgan initiated its coverage on Nikola with a “neutral” rating and a target price of $45 last month. At the time, Coster pointed out that the stock looked fully valued.  

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Right now, Nikola has been undergoing a number of developments. The company plans to announce a partner for the Badger truck. Nikola wants to build Badger trucks by the end of this year. The company has also been implementing strategies for the FuelCell Energy truck in the US. 

Nikola wants to deploy H2 stations for the UK. Last month, the company announced the opening of $5,000 reservations for its pickup truck. Nikola will likely launch its medium-duty trucks in 2021 and some heavy-duty trucks in 2023.  

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Analysts’ recommendations on Nikola stock

Currently, only three analysts cover Nikola stock. Among the analysts, two recommend a “buy,” while one recommend a “hold.” Analysts have given Nikola a consensus target price of $62.5, which implies a premium of around 16% on Wednesday’s closing price.

Notably, RBC Capital analyst Joseph Spak also initiated coverage on Nikola stock with a “sector-perform” rating and a target price of $46, according to a report from TheFly. He thinks that the company has a unique business model that “captures more of value chain” and its “interesting” total addressable market. 

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