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Mixed Bag for Auto Stocks: Analysts' Recommendations in March

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Part 3
Mixed Bag for Auto Stocks: Analysts' Recommendations in March PART 3 OF 8

Tesla: Analysts Are Uncertain after Its Handsome Stock Gains

Analysts’ recommendations

According to the latest data compiled by Reuters, 32% of the 19 analysts covering Tesla (TSLA) stock gave “buy” recommendations, 42% recommended a “hold,” and 26% recommended a “sell.”

Tesla: Analysts Are Uncertain after Its Handsome Stock Gains

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Return potential

On March 16, 2017, Tesla’s 12-month consensus target price was $249.76, which is ~4.7% lower than its market price of $262.05. Notably, Tesla stock has risen ~30% in the last three months. Currently, it’s trading with over 20% YTD (year-to-date) gains. Technically, the company’s stock entered overbought territory after its impressive rally. It could be the primary reason why Wall Street analysts seem to be divided on the stock’s future return potential.

Is the market waiting for Model 3?

Tesla’s much-awaited Model 3 was unveiled on March 31, 2016, by CEO Elon Musk. Much has been said about how Model 3 could be a game-changer for the company. Model 3 deliveries will likely begin in 2H17. Tesla plans to start mass-producing Model 3 on a larger scale next year.

During its 4Q16 earnings event, Tesla’s management reassured investors that its Nevada-based Gigafactory is ready to support Model 3 production.

In the last few quarters, mainstream automakers (XLY) including General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) also accelerated their electric vehicle development. Interestingly, Tesla’s Model 3 vehicles will include the hardware required for full vehicle automation. The special feature could make Model 3 stand out from its competition.

In the next part, we’ll discuss how analysts rate General Motors stock in March 2017.

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