Canaccord Initiates Tesla Coverage With Hold Rating, Considers Products 'Superior'

Tesla Inc TSLA shares traded up about 15 percent after the firm reported second-quarter earnings, and one analyst sees room for continued upside.

The Rating

Canaccord Genuity analyst Jed Dorsheimer initiated coverage on Tesla with a Hold rating and a $336 price target.

The Thesis

Dorsheimer acknowledged Tesla’s “superior product” relative to those of industry competitors. The firm’s Model S, X and 3 are seen to provide greater value to consumers than non-electric options.

“As the company grows into this product portfolio, we are encouraged by the opportunities to change how we travel,” the analyst wrote in a note.

While he expects Tesla’s foreseen stabilization to unlock value, risks around financing, cash burn and “general maturity in the industry” keep Canaccord Genuity on the sideline.

“We would look to become more constructive on opportunistic pullbacks or catalysts that we feel would de-risk the shares such as shifts in corporate governance, consistent production levels and a CEO who is not working 120 hours per week to hold things together,” Dorsheimer wrote.

Price Action

At time of publication, shares were trading down marginally around $348.68.

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