Less than a month after Tesla once again surprised traders by reporting a profit for the third quarter, Jefferies has raised its 2020 price target on the carmaker to $400, which would be the highest that Tesla shares have ever traded if its performance continues strong.
Business Insider reported Jefferies analyst Philippe Houchois had raised his price target on Tesla by $100, and the company’s EBIT estimate for 2020 by as much as 4 percent. He also reaffirmed his “buy” rating on the stock.
Tesla’s share price jumped 20 percent following the release of its third-quarter financial report, which not only beat analyst expectations; it beat them by a lot since the Wall Street consensus on Tesla’s Q3 was for another loss.
While heavy skepticism about Tesla’ performance is perfectly understandable given its track record, the company has also built a reputation for its capacity to surprise, at the expense of traders betting against it. The latest quarterly profit and the consequent share price jump cost short-sellers more than $1 billion.
A team of analysts from Cowen looked into the third-quarter results and maintained their wary stance earlier this month.
“The stock has performed well on the headline (third-quarter) profitability results, but we continue to see Tesla as significantly overvalued given the challenging prospects the company is facing with its current product lineup (S/X/3) and our skepticism of the narrative shift to future growth drivers,” they said, referring to the Semi, the Model Y, and Tesla’s solar business, which has been struggling for a while now.
The Jefferies analysis, however, is more optimistic. In his note to clients, Houchois noted his expectations for increasingly robust financial performance that will result in higher revenues and a stronger balance sheet in 2020. Despite a warning about the possibility of weaker sales and revenues in the fourth quarter, 2019 is looking good overall and "sets a better foundation for a return to growth in 2020 revenue and earnings," the Jefferies analyst wrote.
By Irina Slav for Oilprice.com
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