Market Overview

UBS Maintains Sell Rating On Tesla After Shares 'Left The Orbit'

Share:
UBS Maintains Sell Rating On Tesla After Shares 'Left The Orbit'

Even the most skeptical Tesla Inc (NASDAQ: TSLA) analysts have conceded the company’s long-term potential. Still, some continue to sell at present valuation.

The Rating

UBS analyst Patrick Hummel maintained a Sell rating on Tesla with a price target raised from $160 to $410.

The Thesis

With production volumes poised to double in the next two years, Hummel expects Tesla to become the world’s most profitable automaker.

“We take a more bullish fundamental view on Tesla's technology and cost lead in hardware and software,” Hummel wrote in a Thursday report.

By his account, Shanghai Model 3 production and the likelihood of strong Model Y success should drive 300-basis-point gross margin accretion in Tesla’s auto business, and Model Y and Cybertruck sales could yield a $54,000 average selling price in the premium market.

“Further, Tesla's KPIs show a much higher efficiency than incumbent OEMs as there is no drag from any legacy business,” Hummel wrote. “Tesla should meet and exceed margins and cash generation the premium OEMs enjoyed in their best days.”

UBS estimates a 10% operating margin with free cash flow between $3 billion and $5 billion beginning in 2022.

However, Hummel suspects the market has already priced in expectations for a strong fourth-quarter report, a beat on 2020 delivery outlook, and steady Shanghai and Model Y ramping. At the same time, it continues to overlook demand pressure related to the phase-out of EV tax credits. Hiccups could significantly depress the stock price.

Price Action

At time of publication, Tesla shares traded higher by 1.44% around $577.77.

Related Links:

Elon Musk's Big Day: Trump Compares CEO To Thomas Edison As Tesla's Stock Sets Milestone

Tesla Shorts Vs. Beyond Meat Shorts: Who's Getting Squeezed Harder?

Latest Ratings for TSLA

DateFirmActionFromTo
Apr 2020JefferiesUpgradesHoldBuy
Mar 2020Piper SandlerMaintainsOverweight
Mar 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

 

Related Articles (TSLA)

View Comments and Join the Discussion!

Posted-In: Cybertruck Model Y Patrick Hummel UBSAnalyst Color Price Target Reiteration Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
XPOJP MorganMaintains84.0
UPSJP MorganMaintains113.0
UNPJP MorganMaintains163.0
NSCJP MorganMaintains189.0
MCHPJP MorganMaintains100.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com