Analysts on Tesla
According to the data compiled by Reuters on August 28, about 33.0% of the 27 analysts covering Tesla (TSLA) gave its stock a “buy” recommendation. Another 37.0% recommended a “hold,” and the remaining 30.0% of these analysts covering TSLA suggested a “sell” for its stock.
Consensus target rose
Wall Street analysts’ 12-month target price consensus for Tesla stock was $322.38. This target price was about 3.4% higher than its market price of $311.86 on August 28.
On a year-to-date basis, Tesla stock was up 0.2% without any notable change, compared with 8.4% gains seen in the S&P 500 Index. In the first quarter, its stock lost about 14.5%, primarily due to the much slower-than-expected Model 3 production ramp up. In the second quarter, Tesla became the top gainer among auto stocks with a 28.9% increase. In the third quarter so far, TSLA has lost 9.1%.
The pressure to fix the Model 3 position issues pressured Tesla in the second quarter. This was partly because automakers (XLY) such as General Motors (GM), Ford (F), and Fiat Chrysler (FCAU) are also gearing up to compete with Tesla with their electric cars. Rising competition from mainstream automakers could challenge Tesla’s supremacy in the electric vehicle sector going forward.
Analysts’ consensus target price for Tesla was much lower—near $290.32 about a month ago. Tesla met its second-quarter Model 3 production rate goal of 5,000 units per week. The company’s Automotive segment gross margin for the second quarter stood at 20.6% on a GAAP basis. Although this reflected an improvement over its gross margin of 19.7% in the first quarter, it was lower than its gross margin of 27.9% in the second quarter of 2017.
In its second-quarter update letter, Tesla noted that it expects “to achieve GAAP profitability in Q3 and Q4.” The company also targets to increase its Model 3 production to 6,000 units a week “by late August.”
Tesla added, “We aim to increase production to 10,000 Model 3s per week as fast as we can. We believe that the majority of Tesla’s production lines will be ready to produce at this rate by end of this year, but we will still have to increase capacity in certain places and we will need our suppliers to meet this as well. As a result, we expect to hit this rate sometime next year.”
Continue to the next part to learn how analysts are rating Toyota in August 2018.