TSLA of Tesla Inc.,
The stock’s valuation is “overheated,” analysts at BofA Securities said in a note on Wednesday, highlighting several reasons to “remain cautious despite the hype and momentum.” Analysts raised their price target on the stock to $ 800, from $ 500, but kept its equivalent of a sell rating. The average Tesla price target of 31 analysts surveyed by FactSet is $ 912, with the top of the range above $ 1,500. The “hyperbolic” rise in Tesla shares “appears to be building on itself with similar moves in shares of newer / niche technology companies” such as Nikola Corp. NKLA,
and “ongoing turnover and momentum of growth stocks in the market,” with technical purchases ahead of Tesla’s possible addition to the S&P 500 index “adding fuel to the race, analysts said.” However, in our view, the $ 1,500 + share price is not supported by fundamentals, with a valuation largely driven by momentum and low rates. “Among 10 Reasons to Stay Cautious with Tesla, Analysts They said that while volume growth is real, it is limited by expanding capacity and capital availability, the EV is likely to be a smaller than appreciated market, and Tesla’s profitability and cash flow. ” they are not large or consistent, and they are significant risks. “Furthermore, although Tesla is often compared to technology companies and industry disruptors such as FAANG stocks, Tesla’s business model is capital intensive, which” makes its business is much less scalable than that of a technology company. “Tesla is slated to report second-quarter earnings after the bell, and analysts surveyed by FactSet expect an adjusted loss. ada 2 cents per share on sales of $ 5.2 billion. The shares have gained 280% this year, compared to 1% gains for the S&P 500 SPX index,
and in contrast to a loss of around 6% for the Dow Jones Industrial Average. DJIA
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