Wall Street turned more positive at Tesla Inc. on Thursday, a day after the Silicon Valley automaker reported another quarter of windfall profits and said it was on track to sell as many cars in 2020 as it expected despite the pandemic. of coronavirus.
A lot of Wall Street analysts, both bulls and bears, raised their price targets on Tesla TSLA,
an action. However, the average target remained well below current prices, suggesting that most analysts believe the stock is overvalued.
read more: Elon Musk doesn’t want Tesla to be ‘super profitable’ as it skyrockets towards a $ 300 billion valuation.
Tesla shares gained nearly 1% on Thursday and hovered near its record close of $ 1,643 reached on Monday. Shares rose as much as 7.8% in the after-hours session Wednesday, minutes after the second-quarter report was released.
FactSet, MarketWatch
The electric vehicle maker reported a surprise second-quarter profit on Wednesday night, sales fell less than expected, and said it had the capacity to deliver more than 500,000 vehicles this year.
GAAP and adjusted earnings for the fourth consecutive quarter put Tesla on a course to join the benchmark S&P 500 SPX,
probably in a few months. That would put stocks in the portfolios of countless index tracking funds, and many managed funds would likely do the same to balance their holdings.
See related: Tesla Selects Austin, Texas As Next ‘Gigafactory’ Location.
No fewer than 14 of the 33 Wall Street analysts surveyed by FactSet have raised their price targets after the results, including those who are bullish, neutral and bearish on the stock. That raised the average to $ 1,152.10 from $ 751.48 at the end of June, but that target was still 28% below Wednesday’s closing price of $ 1,592.33.
Among the bulls, analyst Colin Rusch at Oppenheimer more than doubled his target to $ 2,209, which is 39% above Wednesday’s close of $ 968. He reiterated his overweight rating on stocks for at least the past few years. last two years.
“We believe [Tesla] it continues to expand its product and process technology advantages as it disrupts the transportation industry by being better, faster, and cheaper than competitors, “Rusch wrote in a note to customers.
Rusch is a minority among analysts covering Tesla, as only 7 out of 33 analysts are bullish, compared to 15 who rate the stock as the equivalent of hold and 11 who are bearish.
FactSet
Among those bears, JP Morgan’s Ryan Brinkman raised his target to $ 325, which was 80% below Wednesday’s close of $ 295. He has had an underweight stock rating for at least the past three years.
Brinkman said on a closer look, the “blatantly sharp earnings hit,” Tesla reported amid a challenging macro environment, fueled by “much higher-than-expected regulatory credit sales, which tend to be bulky and expected to decrease over time. “
He said that despite the “really better” results, the stock remains “significantly overvalued.”
If Brinkman maintained his bearish stance, Jeffrey Osborne at Cowen raised his Tesla stock rating one notch to the neutral equivalent, and also raised his stock price target to $ 1,100 from $ 300.
“We fully admit that we have been wrong in (Tesla) the past few years,” Osborne said. “Tesla has exceeded our expectations in recent quarters … While there have been many negative Tesla cases over the years, the company has maintained sustained profitability (4 quarters in a row), has enough cash (more than $ 8 billion), and new factories in Texas and Germany should make the company’s deliveries less bulky and loaded in the backend. ”
Several catalysts for the stock are in storage for Tesla within the next year or so, including its “battery day” on September 22 and the launch of the Cybertruck.
Tesla shares are also benefiting from “a shortage of investment opportunities in the vehicle electrification space,” which could maintain its “strong” momentum in the short term, said Emmanuel Rosner of Deutsche Bank. Rosner raised his Tesla price target to $ 1,500 from $ 1,000.
Meanwhile, Wedbush analyst Dan Ives said Tesla Chief Executive Elon Musk hit a home run with the earnings report as the company continues to challenge skeptics as it surprisingly resets its 2020 delivery target of 500,000 vehicles, but maintained the neutral rating it has had in stock since April 2019.
But it raised its target price to $ 1,800, which is 13% above Wednesday’s close of $ 1,250.
Tesla’s shares have soared nearly four times this year through Wednesday. In comparison, the shares of General Motors Co. GM,
are down 28%, and Ford Motor Co. F,
It has plunged 26%, while the S&P 500 has gained 1.2%.
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