Analysts at BofA Secures and Morgan Stanley improved their valuations on shares of Tesla Inc. on Friday, thinning the ranks of Tesla bears and increasing the stock towards another record.
The stock hit a all-time high of $ 1,650.71 on Friday, and has appreciated almost fourfold this year. Earlier this week, the company announced a five-by-one stock split to make the shares more accessible to investors and employees.
BofA and Morgan Stanley highlighted the stock rally and upcoming stock catalysts, such as the company’s “battery day” next month.
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After 17 years in existence, Tesla is “just now” making about 500,000 a year and reaching a little higher or earning profit money and free cash flow, “which is an uncertain breakthrough,” said analyst John Murphy in BofA in his note.
However, “the leadership of CEO Elon Musk, a compelling brand and improved execution is bringing an ever-increasing stock price,” he said.
“This is direct evidence that the company has uninterrupted access to low-cost capital, which remains a key advantage that can (and should) be driven to accelerate growth to nearly 50% per year over the next five years,” he said. said the analyst.
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Murphy improved his rating at Tesla to the buy-in equivalent of expectation, and raised his price target to $ 1,750 from $ 800, which had been among Tesla’s lowest targets on Wall Street.
Of the 35 analysts surveyed by FactSet focusing on Tesla, a third percentage of the shares of a sale, and half rate it as an expectation, with the remaining 20% rating it as a purchase. The average price target is $ 1,232, representing a 25% failure from Friday’s stock price.
“While we remain skeptical that (Tesla) will be the leading EV maker in the long run, if a large global footprint can be built with cost-free capital, the ‘growth’ story would hold the day for stocks,” Murphy said. He said.
Adam Jonas at Morgan Stanley raised his rating to the holding-off equivalent of the sale, and raised his price target to $ 1,360.
The analyst and his team downgraded Tesla shares to their sell-off from neutral in June, citing trade risks between the US and China, concerns about short-term demand and the company’s continuing capital needs.
“With this report, we now feel we can justify the transfer of a third-party battery business value from the bull issue sphere to our core issue,” Jonas said in a note Friday, explaining that the bank now estimates Tesla as a supplier of batteries and electricity in addition to its core business of making cars.
The idea that Tesla can provide “not only train drives and software, but superior battery packs in the automotive industry is gaining more and more validity.”
Tesla has set a “battery day” for September 22 to showcase its battery technology.
Shares have gained 293% this year, compared to gains of about 4% for the S&P 500 index.