S&P says Tesla’s stock (TSLA) rallied because of upcoming Model 3 event, but doesn’t deserve the valuation

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Tesla’s stock (TSLA) is down almost 5% today following a downgrade from S&P Global Market Intelligence. S&P analyst Efraim Levy issued a new note today downgrading Tesla to “sell” with a new price target of $155, while the stock currently trades at ~$223.

Here’s an excerpt from Levy’s note via Barrons:

“With Tesla above our $155 target, we lower our opinion on these volatile shares to Sell. The shares have rallied sharply recently in anticipation of the Model 3 reveal later this month and amid bullish comments from some equity analysts.”

Indeed, Tesla’s stock rallied about 60% since Tesla CEO Elon Musk confirmed the unveiling of the Model 3 for March 31st. The analyst agrees with the consensus that Tesla will see a lot of growth in the short-term, but he doesn’t agree with the valuation:

“While we expect sales and EPS to surge in ’16, we see significant execution and valuation risk in the premium priced stock. Our target equates to a multiple of 111X our ’16 EPS projection of $1.40, and 43X our 2017 EPS estimate of $3.60, reflecting our expectation for rapid automotive profit growth through ’17, from ’14′s base, but we note risks.”

Levy has a very good TipRanks score with a 75% success rate and he stands at #300 out of 3,821 on the analyst leaderboard.

Tesla will be unveiling the Model 3 at Tesla’s Design Studio in Hawthorne, California, on March 31st at 8:30pm Pacific.

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Comments

  1. Mitchell - 7 years ago

    Fred…do you agree with this?

    • Fred Lambert - 7 years ago

      I have yet to see a decent valuation model that works with TSLA. Here I’m just reporting on what contributed to the significant price drop today. Though oil didn’t help either.

  2. notreally.com - 7 years ago

    I’m dubious about the cause and effect. The Belgium event + oil news is affecting everything. The downgrade is a coincidence. It’s a good story though if you’re playing options and you want to create volatility news.

  3. James Rowland - 7 years ago

    NASDAQ will publish the bi-monthly short interest data for TSLA tomorrow. You have to wonder about the timing of these revaluations…

  4. Atlantis - 7 years ago

    Reading in depth the analyse made by this “Research Group” their opinion seems logic but at they own purpose and the ones who are behind this. For example, simply reading the conclusion of the environmental part (and from where they take this conclusion from (mostly researches made by organisations financed directly or indirectly by Koch Brothers)) we have a serious clue: “Just as switching from tobacco cigarettes to e-cigarettes is still bad for your health,
    switching from gas automobiles to electric vehicles is still bad for the environment”
    They cite for example that Tesla lithium batteries end in landfill!!! That a Tesla is far more harmful for environment because electricity needed for Tesla cars came all from coal plants. And a lot and a lot of fullish assumptions, not to say lies, that have the signature of a criminal organisation named oil industry.

    • freedomev - 7 years ago

      Atlantis, that is a lie about batteries which are the most recycled thing because they are filled with metals, they are valuable. I pay $150/kwhr for Volt/Leaf to make EV’s and soon as they become common, they will be used in homes, buildings for power storage.
      Except some not temp controlled early ones, EV batteries are looking to have fairly long lives, at least 15 yrs, maybe 20 yrs or longer at reduced capacity.
      So it will be a while if ever EV batteries are a problem and just another Koch, big oil, auto myth.
      Of course they don’t mention the truly polluting one, lead, they have in every car and will need to throw away 5 in it’s life!! I wonder why?
      Nor do they mention they were responsible for the 60’s-90’s world crime wave from car gasoline lead poisoning? That is why crime is lower, kids stopped being poisoned by leaded gasoline.
      In each country, area after cutting leaded gasoline, crime went down all around the world, states as a new generation grew up without it.

  5. Atlantis - 7 years ago

    For whose who will have the patiences to read the report a recommend the pages 28 and 29. The bullshit about Tesla having less EV patents than other auto makers and less people producing these patents than in others car makers is so ridiculous that a laugh a lot. They compared thousands of EV patents these companies did along decades but for what results? Dragging their feet as much as they can, crushing their own product fearing its success (GM), burning entire electric city trolley networks, and they are trying timidly to cash the range and performance of the model S from 2012! But not to fast because it would be the proof that, at the contrary of they have claimed for so long because being so slaves of oil industry, compelling EV cars are possible. Sure Tesla have few people making patents, but but, each other giant car makers have more engineers that the all Tesla workforce, but they are behind Tesla cars, so what.
    Conclusion, trying to short Tesla Stocks for impeding Tesla to have investors backing it and eventually destroy their business as usual. The only thing I dream about is Tesla model III having 1 millions reservations to put a big hammer in the face of all these retards and obsolete guys (realisticaly, it will not happen but would be great!). They should go swimming in the rivers and lakes of Alberta Oil sands exploration to see the true environmental war their friends from oil industry are doing and go to hospitals to see all the persons with lung cancers because of fossil fuel emissions.
    Sorry for all my behaviour but I’m really fed up with all these bullshit persons that killed more people than ISIS crazy animals each year but silently and without being account for all the mess they made to humanity these last century.

  6. Rob - 7 years ago

    So the stock rallies ahead of the model 3 reveal and a year or two away from actual production and delivery… that’s a long time between now and profit especially for an economy based on artificial stimulation and on the brink of or in recession.

    • freedomev - 7 years ago

      The only reason the economy isn’t going fast is republicans won’t pass a decent budget and get on to tax reform for the last 6 yrs, even threatening to not pay the massive debt they caused 2000-2008 that proved their tax, regulation, economics, energy, war policies are fiscally and morally bankrupt.
      And why they are voting for Trump. Not even repubs like repubs anymore.

  7. freedomev - 7 years ago

    This is just noise to drive churn, fees for brokers, short sellers, etc. And a buying opportunity on the dips, then sell when overheated. But the fact is Tesla will in just 5 yrs likely to be 5x’s larger is worth a lot so it’s price is going up..
    It is likely he can sell every model 3 he can build at $35k. Tesla has a 20% price advantage in EV, battery tech and a huge home, building, etc battery market means no one can come close to them for quite a while.

  8. bob - 7 years ago

    This analyst doesn’t know the real reason why the stock rallied. Model 3 is only 1/3 of the story. If an analyst always know what he is talking about, he wouldn’t be an analyst. He would be managing a hedge fund, better yet, he would be managing his own money and enjoy life. He saw other analysts give bullish ratings, he assumes they are trying to push the stock higher. He doesn’t understand his model on Tesla is wrong. Tesla is on it’s way to become the number 1 leader in the car industry and energy storage industry. Both are trillion dollar markets.

  9. Nathanael - 7 years ago

    Please, please let TSLA go down to $155. I would like to buy more cheap stock. 🙂

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Avatar for Fred Lambert Fred Lambert

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