: Evercore ISI starts covering Nikola stock at hold, says next year will be ‘vital’

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Nikola Corp. is “far from a ‘clean’ story,” but there’s reason to be “cautiously optimistic” that its ambitions around hydrogen-powered vehicles offer investors an entry into the nascent industry.

That’s the word from analysts at ISI Evercore, which late Tuesday started covering Nikola stock NKLA, +0.43% at their equivalent of hold and a price target of $20. That would represent an upside of more than 21% over Tuesday’s closing.

The next year and a half will be “vital” for the company to regain investor confidence, the analysts, led by Chris McNally, said in the note.

“We are already encouraged by a more streamlined blueprint vs. 6 months ago,” including industry veteran Steve Girsky replacing founder Trevor Milton as board chairman.

Girsky is likely to refocus the company on its core vision around hydrogen-powered commercial trucks and hydrogen fueling, leaving behind “stretch consumer products” such as pickups, the analysts said.

Nikola scratched plans for its Badger pickup when a deal with General Motors Co. GM, +0.10% didn’t go as far as planned.

The Evercore ISI analysts established a “bull case” scenario of $37 a share and a “bear case” of $10.

The bull case includes a quick, favorable-to-the-company conclusion of ongoing U.S. Securities and Exchange Commission and Justice Department probes and Nikola executing its expansion plans “flawlessly,” the analysts said.

Nikola debuted on public markets in June after a merger with a blank-check company. So far this year, the stock is up nearly 60%, compared with gains around 14% for the S&P 500 index SPX, +1.29%.

That rise is, however, a step down from triple-digit gains it enjoyed up until late summer.

Short-seller Hindenburg alleged in September that the company amounted to an “intricate fraud.” The report, which the company called “misleading” and a “hit job,” sparked the federal investigations.

Nikola is also fresh from firming up its partnership with GM, which many on Wall Street viewed as a watered-down version of what the companies had announced months before.