Why Shares of Fisker Are Stuck in Reverse Today

What happened

On a day when the S&P 500 and Dow Jones Industrial Average are inching higher, shares of Fisker (FSR -7.77%) are racing in the other direction. An analyst’s unfavorable outlook on the electric vehicle (EV) stock is motivating investors to park it somewhere other than their portfolios.

As of 1:48 p.m. ET Thursday, shares of Fisker had declined by 9.2%.

So what

Seeing a slight downside to the stock, analyst Rod Lache of Wolfe Research downgraded Fisker to underperform from peer perform, assigning it a $6 price target. Based on Wednesday’s closing price of $6.18, that implied a downside of about 3%.

The EV maker is set to begin deliveries of the Fisker Ocean SUV in the week of June 19.

The company has been advancing the production of its vehicles ahead of commencing deliveries. By the end of June, Fisker is targeting the assembly of 1,400 to 1,700 vehicles in preparation for ramping up deliveries to customers in the United States and Europe.

While management is optimistic about the company’s prospects, Fisker has largely failed to excite analysts recently. Prior to Thursday’s attention from Wolfe Research, Fisker had received ratings of hold and underweight, respectively, from Needham and Barclays in February.

Now what

Unsurprisingly, shares of Fisker are sinking in response to the analyst’s pessimistic outlook. It’s important for potential investors to recognize, though, that this perspective should be taken with a grain of salt. Should the company achieve success working its way through its orders, increasing production, and delivering vehicles on time, the market may well reward it with a higher stock price.