Shares of Hyllion Holdings (HYLN) are sliding on Monday after UBS analyst Steven Fisher downgraded the stock to Sell on his contention that expectations remain too high and he believes the company is not going to meet sales expectations for 2022 through 2024. Hyliion, along with other EVs startups, has dealt with commercialization challenges, while competition continues to intensify, the analyst argued.

SELL HYLIION: UBS analyst Steven Fisher downgraded Hyliion Holdings to Sell from Neutral with a price target of $5, down from $14. The analyst believes the company is not going to meet revenue expectations for 2022 through 2024, which is a key valuation driver. Further, Fisher argued that Hyliion hitting milestones has taken longer than expected. The analyst expects a "careful" customer adoption rate and notes that market conditions - such as supply chain and labor shortages - are now more challenging. In that context, Fisher thinks Hyliion shares currently reflect "overly optimistic" expectations for its sales ramp. While the analyst doesn't currently forecast that the company will need to raise more capital, since he now expects the ramp-up to be longer and more costly Fisher sees a greater risk Hyliion could need to raise more capital should there be even more delays, more inflation, execution challenges, or pricing pressure.

Hyliion, along with other EVs startups, has dealt with commercialization challenges, while competition continues to intensify, the analyst contended. The company's delays include redesigning the Hybrid product, developing a new battery module, slower R&D than planned due to supply chain disruption, a longer than expected testing and validation timeline, and slow hiring, Fisher added. He expects market-based issues to persist, including labor shortages and a tight supply chain.

SPAC MERGER: Hyliion went public in October though a special purpose acquisition company, or SPAC, deal. The company produces electrified powertrain systems for trucks that it says can augment or fully replace traditional diesel- or natural gas-fueled powertrains. Hyliion systems "are designed to improve performance and lower total cost of ownership while leveraging the existing alternative fuel infrastructure," the company has said.

PRICE ACTION: In Monday morning trading, shares of Hyliion have dropped almost 12% to $6.89.