Analysts at BofA Securities and Morgan Stanley upgraded their ratings on Tesla Inc. shares on Friday, tinning the ranks of Tesla bears and increasing the stock to another record.
Tesla TSLA,
stock is on Friday for another very high, and has almost doubled in price this year. Earlier this week, the company announced a five-for-one action split to make the shares more accessible to investors and employees.
BofA and Morgan Stanley mark the stock rally and future stock catalysts as the company’s ‘battery day’ next month.
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After 17 years of existence, Tesla ‘alone’ now makes around 500,000 a year and achieves just above breakeven profits and free cash flow, ‘some uninspiring progress’, said analyst John Murphy at BofA in his note.
However, “leadership, a compelling market and improved execution by Chief Executive Elon Musk” lead to an ever-increasing share price, “he said.
“This is direct evidence that the company has unrestricted access to low-cost capital, which remains a major benefit that can (and should) be used to accelerate growth to nearly 50% per annum over the next five years,” the analyst said.
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Murphy upgraded its rating on Tesla to the equivalent of buy from hold, and raised its price target to $ 1,750 from $ 800, which was one of the lowest Tesla target targets on Wall Street.
Of 35 analysts surveyed by FactSet and concentrating on Tesla, a third rate the stock a sell, and a half rate it a hold, with the remaining 20% valuing it a buy. The average price target is $ 1,232, representing 25% disadvantage of Friday’s share price.
“While we remain skeptical that (Tesla) will be the dominant EV carmaker in the long run, if a large global footprint can be built with no cost capital, the ‘growth’ story would bring the day before the stock market,” Murphy sei.
Adam Jonas at Morgan Stanley increased his rating to the equivalent of hold of sales, raising his price target to $ 1,360.
The analyst and his team downgraded Tesla shares to their equivalent of sales, from neutral, in June, citing trade risks between the US and China, concerns about near-term demand, and the company’s continued capital need.
“With this report, we now feel that we can transfer some of the value of the battery business of third parties from the realm of the bully business in our base business,” Jonas said in a note Friday, explaining that the bank now values Tesla as a battery and powertrain supplier next to their main car manufacturing company.
The idea that Tesla could supply “not only trains and software, but superior battery packs to the automotive industry is gaining more and more validity.”
Tesla has set a ‘battery day’ for September 22 to showcase its battery technology.
The stock has gained 293% this year, compared to gains of around 4% for the S&P 500 index. SPX,
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