Tesla Inc. shares rose 3% in early trading Monday, after Canaccord upgraded the stock to buy from wait and said the electric vehicle story is underappreciated on Wall Street.
"We believe the last two quarters and the last guide for [the first quarter] have removed significant concerns for both the production capacity and the profitability of the critical model 3," analyst Jed Dorsheimer wrote in a note. "As such, we see a more stable 2019 with far fewer concerns for investors in the company."
Recent price reductions are further evidence that discounting has the desired effect, he said. With shipments to the EU and China looking strong, the "small profit" company
TSLA, + 3.12%
provided for the first quarter will prove to be the low of EPS for the year and may put arguments from short sellers to rest, he said.
"Our past corporate governance concerns were added with the addition of Larry Ellison and Ms. Wilson-Thompson as independent directors, and we believe that Elon Musk demonstrates a quieter behavioral characteristic of strong leaders," the analyst said.
In the beginning January, Tesla announced that Oracle Corp.
ORCL, + 0.29%
co-founder would join the board with a Walgreens Boots Alliance
WBA, + 0.26%
human resources executive, Kathleen Wilson-Thompson, as it moved to comply with one of the terms of settlement with the Securities and Exchange Commission turned off by Musk in the wake of It became known as his go-private tweet earlier this year.
Musk irked the regulator with a tweet which meant he had secured funding for a deal to take Tesla privately when he didn't really. The CEO agreed that he and his company would each pay a $ 20 million fine, that he would resign as chairman, and that the company would add two new independent directors to remedy corporate governance.
Tesla's autopilot technology has an almost insurmountable lead in self-driving and will be the key to future transport, wrote Dorsheimer on Monday. And liquidity issues and concerns that a pending repayment of convertible bonds would have been set aside by the company's cash flow generation of $ 1.23 billion, and cash on the $ 3.7 billion balance, he wrote.
Canaccord increases its Tesla stock price target to $ 450 from $ 330, based on 30 times the fiscal 2020 earnings per share estimate of $ 15.02, which Dorsheimer said can be conservative given the strong earnings growth expected over the next few years. The new target is about 44% above the current share price of $ 313.
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Wedbush analyst Daniel Ives, a long-standing Tesla ox, said in a note Monday that Tesla is changing from a production history to a demand history now as the first model 3- The cars have arrived in Europe. Ives said he would be in Europe this week to measure the demand and delivery logistics on the ground, especially in the Norwegian capital, Oslo. He expects that there will be "epicenter for demand for model 3 with total EV sales growing in the country by 40% [or more] and a strong ramp expected this year with Tesla leading the tax."
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With American electric vehicle tax credit being cut by 50% to $ 3,750 and then again to $ 1,875 it July 1, "Tesla's demand history in [the first half of 2019] has clearly shifted from the United States to Europe as nicely model 3 demand in the region will be the largest fluctuation factor for the stock in the short term," Ives wrote.
Wedbush rates the shares to equivalent of a purchase with a 12 month price target of $ 390.
Tesla shares have fallen 1.5% over the past 12 months, while S & P 500
SPX, + 0.06%
has increased 3.4% and the Dow Jones Industrial Average
has increased 3.8%.
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