Shares of Romeo Power (RMO) made a sharp U-turn on Tuesday, surging by 60%. However, after immediately’s 18% plunge, and as a sign of what a slog 2021 has been to this point, the shares nonetheless sit 53% into the pink on a year-to-date foundation. That stated, one Street analyst is assured the electrical truck battery pack provider has many extra inexperienced days to look ahead to.

BTIG’s Gregory Lewis reiterated a Buy score on RMO shares together with a $30 value goal. The analyst, subsequently, expects the inventory to climb by one other 187% over the approaching months. (To watch Lewis’ observe report, click here)

RMO’s turnaround got here after the corporate introduced it has entered a long-term battery provide settlement with Paccar. Romeo will provide battery packs to the heavy-truck large for its Peterbilt 579 (Class-Eight truck) and 520 (Refuse Truck) battery-electric truck (BET) fashions, in a deal which is able to final by way of 2025. The deal targets the US and Canadian markets, and the primary battery cargo is anticipated in 2022.

Lewis notes two of Paccar’s manufacturers – the Peterbilt and the Kenworth – collectively account for roughly 30% of the US and Canada Class Eight truck market and take a ~20% lower of the medium-duty market.

Lewis is in little question as to the deal’s significance for Romeo for 2 particular causes. For one, it brings a “world-class heavy-duty truck manufacturer into RMO’s customer base.” Secondly, the settlement will lay to relaxation a number of the worries relating to Romeo’s worth proposition.

“One of the biggest pushbacks around RMO’s $500+M backlog has been its customers are largely new/start-up EV suppliers (this supply agreement changes that),” the analyst stated. “The other key pushback on RMO has been the technology, in other words, any company can assemble a battery pack. And while that is true, the rubber looks to be meeting the road with this supply agreement in that not all battery technology nor battery packs are created equal.”

EV platforms are significantly useful for refuse vans attributable to their stop-start nature and silent engines. The Peterbilt 520 boasts a vary of roughly 100-miles and expenses in simply 4-hours. As rubbish vans typically find yourself touring to their unloading locations, Lewis notes that integrating an RMO battery “should boost that current range offering.”

Lewis is Romeo’s most outstanding Street bull. The inventory at the moment has a Hold consensus score primarily based on 2 Buys and 1 Hold and Sell, every. The common value goal stands at $15.43 and suggests upside potential of ~48% within the yr forward. (See RMO stock analysis on TipRanks)

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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is essential to do your personal evaluation earlier than making any funding.



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