Tesla (TSLA) had a tough start of the year on the stock market despite having delivered profits for two quarters in a row – a first ever for the company.
But now it jumps up in pre-market today after two positive notes from Wall Street analysts seeing some upside.
Canaccord Genuity is out with a new note to clients today stating that the company managed to remove some of their concerns.
Analyst Jonathan Dorsheimer wrote in the note:
“We believe the last two quarters and recent guidance for Q1 have removed significant concerns for both production capability and profitability of the critical Model 3,”
More specifically, Dorsheimer believes that the current cash flow and cash position should put the concerns to rest over the almost $1 billion convertible note that Tesla needs to pay back next month:
“With the strong operating cash flow generation of $1.23B and cash on the balance sheet of $3.7B, the liquidity concerns and convertible note repayment are no longer valid concerns in our view.”
As for the future, the analyst can now see Tesla reducing Model 3 costs enough to reach the promised $35,000 base price:
“We view the recent string of price cuts as further proof that the cost cutting and right sizing that the company has undertaken are resulting in concrete movement towards the ultimate goal of an affordable $35,000 Model 3,”
Canaccord upgraded Tesla’s stock (TSLA) to buy from hold – raising its price target to $450 from $330.
Jonathan Dorsheimer is ranked #4,546 out of 5,137 Analysts on TipRanks with a success rate of 40% and an average return of -4.4%. He has been maintaining a hold rating on Tesla’s stock over the last year:
Wedbush is also out with a new note on Tesla and they are still positive on the stock, but they are being more cautious.
Analyst Dan Ives writes:
“Tesla has now shifted from a production story to a demand story, with more steady state weekly Model 3 production poised to hit 7,000 per week by the end of 2019 and enough production capacity now between Fremont/Giga to hit the company’s 360,000 to 400,000 vehicle delivery guidance for 2019,”
He has also been encouraged by Tesla lowering the price of Model 3 and he sees further demand from the upcoming $35,000 version.
That said, Ives believes there’s still work to be done for the profitability of the program:
“Overall, the profitability picture for 2019 and the all-important Model 3 demand trajectory in Europe for Tesla looks encouraging for Musk & Co., but there is clearly heavy lifting ahead around Europe logistics/cost-cutting/driving incremental US demand that will remain overhangs and thus make Tesla a ‘prove me’ story the next few quarters,”
Wedbush has an ‘Outperform’ rating on Tesla’s stock (TSLA) and a price target of $390.
Dan Ives is ranked #733 out of 5,137 Analysts on TipRanks with a success rate of 60% and an average return of 5.3%. He has been maintaining a buy rating on Tesla’s stock over the last year:
Tesla’s stock (TSLA) was up over 2% – trading at $312 in pre-market this morning following those two notes.