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In this file photo taken on September 03, 2020 Tesla CEO Elon Musk gestures as he arrives to visit the construction site of the future US electric car giant Tesla, in Gruenheide near Berlin. –
odd andersen/Agence France-Presse/Getty Images
It isn’t too late to “join the party.”
That’s according to analysts at Baird, who on Thursday upgraded shares of Tesla TSLA, +0.16% to outperform and lifted their price target to $488. The electric-car maker late Wednesday reported a fifth straight quarter of profit and sales that climbed 40%. Chief Executive Officer Elon Musk described the July-September period as Tesla’s “best quarter in history.”
In a note to clients, Baird analysts Ben Kallo and David Katter admitted they were “too early” in downgrading the stock to a neutral rating in January, after a longtime bullish position. At the time, they suggested it was time to cash in on gains. Tesla shares have soared over 405% so far this year.
Here’s their mea culpa: “Clearly incorrect, we are now upgrading share as we think TSLA has the substantial access and ability to deploy capital, and has multiple ways to drive substantial revenue growth.”
But better late than never on that upgrade, they suggest. “Tesla’s competitive moat over peers is substantial (and growing, enabled buy rapid capital deployment) and we think it is unlikely traditional OEMs [original equipment manufacturers] will be able to effectively compete over time,” said Baird analysts.
“We view Tesla as a ‘must own’ stock for investors looking for exposure to ESG, sustainability and disruptive technology trends,” they added.
Kallo and Katter recently upgraded their price target to $450 from $360, ahead of the latest nudge higher.
Opinion: Tesla plays smoke and mirrors with profits again
Elsewhere, Dan Ives at Wedbush left his own neutral rating on Tesla intact, in a note that was released ahead of the earnings call. What’s important, said Ives, was the fact that Tesla “reiterated its goal of 500,000 vehicles for the year.”
Ives noted that Tesla’s cash from operations was $2.4 billion, ahead of their own estimates. “This sustained level of profitability is key for the bulls and speaks to a business model which is staying out of the red ink despite this unprecedented COVID-19 dark storm,” he said.
