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BofA Is Less Bearish On Tesla Now, Upgrades Stock

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BofA Is Less Bearish On Tesla Now, Upgrades Stock

Shares of Tesla Inc (NASDAQ: TSLA) have lost more than half of its value since peaking near $970, which prompted BofA Securities to put an end to its bearish stance.

The Tesla Analyst

John Murphy upgraded Tesla's stock from Underperform to Neutral with a price target lifted from $370 to $500.

The Tesla Thesis

Murphy said Tesla's status as a "trailblazer" within the electric vehicle market remains unchanged but investor optimism surrounding its business and financial outlook is "overhyped." Investors are also guilty of overlooking a multiple of potential headwinds, which justifies a "relatively cautious" on the stock.

However, a bearish stance may no longer be justified. The research firm uses a blended average of a series of assumptions pertaining to a Bear/Base/Bull estimates that are based on EV/Sales and EV/EBITDA multiples from a set of comparable companies compared to similar Bear/Base/Bull 2022 earning estimates.

See Also: Tesla Shares Drop As Alameda County Says Fremont Factory 'Not An Essential Business'

A bullish stance would be difficult to justify for a plethora of reasons, such as:.

  • Tesla's volume growth is limited to its capacity expansion and capital commitment.
  • The overall EV market is smaller than many believe it to be.
  • Current cost of capital is only a temporary advantage.
  • Profit and cash flow history is far from consistent.
  • After a decade of being in business, the company still needs to seek outside financing.
  • Credit investors are "skeptical."
  • Investor shifts away from momentum stocks could "be painful."

TSLA Price Action

Shares of Tesla were trading lower by 7.5% Wednesday morning at $398.

Latest Ratings for TSLA

DateFirmActionFromTo
Nov 2020WedbushMaintainsNeutral
Nov 2020Morgan StanleyUpgradesEqual-WeightOverweight
Nov 2020B of A SecuritiesMaintainsNeutral

View More Analyst Ratings for TSLA
View the Latest Analyst Ratings

 

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Posted-In: BofA Securities electric vehicles John MurphyAnalyst Color Upgrades Price Target Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
CAMTStifelInitiates Coverage On19.0
ELMDNorthland Capital MarketsInitiates Coverage On15.0
DKNGUBSInitiates Coverage On52.0
DIODTruist SecuritiesInitiates Coverage On84.0
TGTArgus ResearchUpgrades205.0
View the Latest Analytics Ratings
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