Tesla Stock: J.P. Morgan, RBC Raise Price Targets

Tesla (TSLA) stock spiked about 20% after hours on October 23, the day of its third-quarter earnings. Notably, Wall Street analysts have reacted positively to Tesla’s earnings. J.P. Morgan, RBC, Credit Suisse, and Canaccord all raised their price targets on Tesla stock.

Wall Street analysts raise targets on Tesla stock

Tesla stock rose due to a surprise profit in the third quarter. Wall Street analysts expected Tesla to post a loss in the quarter.

J.P. Morgan raised its price target on Tesla stock from $200 to $220. Canaccord Genuity increased its target on the stock from $350 to $375. Plus, RBC increased its price target on Tesla stock from $190 to $220. Credit Suisse raised its target from $189 to $200.

Wall Street analysts’ mean price target on Tesla stock stands at $248. The target implies a 3% loss from its current level.

Tesla stock surges on third-quarter profit

Tesla’s net income stood at $143 million in the third quarter. Wall Street analysts had expected a loss of $79 million for the quarter. In the second quarter, Tesla posted a loss of $408 million. This improvement from a loss to a profit lifted investor sentiment in Tesla stock.

Tesla saw record deliveries of 97,186 vehicles in the third quarter, reflecting 1.9% quarter-over-quarter growth. While Model S/X deliveries fell 1.3% quarter-over-quarter to 17,483 units, Model 3 deliveries rose 2.7% quarter-over-quarter to 79,703 units.

Tesla’s Model 3 ASP (average selling price) decreased due to its Asia mix and EMEA price changes. However, higher operating efficiency and cost reductions supported the company’s margins, leading it to profitability. Tesla’s third-quarter profits show that its cost-reduction exercise has started yielding results.

Tesla’s Model 3 and Model Y plans

Tesla has started the trial production of Model 3 at its Gigafactory 3 in China. The factory was built in a record timeframe of 10 months. The factory costs about 65% less than Tesla’s Gigafactory in the US. The total installed capacity at Gigafactory 3 is 150,000 units of Model 3 cars per year. The company’s Model 3 factory in the US has a capacity of 350,000 units per year.

Tesla is building a factory in Fremont, California, for its Model Y production, which is expected to begin next year. The company is using its experience from Gigafactory 3 to ramp up the construction work at its Fremont site.

Tesla also has plans in the self-driving car segment. To learn more, please read Is Elon Musk Right about Tesla’s Self-Driving Timeline?

Peers’ performance

Auto stocks posted mixed performance yesterday. Although Tesla stock fell 0.4% on the day, it jumped more than 20% in after-hours trading.

Ford (F) reported its earnings on Wednesday. The company’s profits surpassed Wall Street analysts’ estimates. However, lower guidance brought the stock back to earth. Although Ford stock rose 1.5% on October 23, it fell 1.1% in after-hours trading.

General Motors’ (GM) stock price rose 0.8% on October 23. However, Fiat (FCAU) and Ferrari’s (RACE) stock prices fell 0.8% and 1.3%, respectively, on the day.

Wall Street’s opinion on TSLA stock and peers

Wall Street analysts have mixed opinions on Tesla stock. Of the 34 analysts who cover Tesla, 11 analysts assign it a “buy” or “strong buy” rating. Further, 10 analysts rate TSLA stock as a “hold.” The remaining 13 analysts rate Tesla stock as a “sell” or “strong sell.”

Ford is rated positively by seven out of 18 analysts. Ford’s mean price target of $10.40 implies a 13% upside from the current level. GM stock is rated as a “buy” by 14 of 19 analysts. GM’s price target of $47 implies a 30% upside potential.

Two of the four analysts that cover Fiat rated it as a “buy.” Fiat’s price target of implies a 32% upside potential. Ferrari is rated positively by eight of 12 Wall Street analysts that cover the stock. Ferrari’s mean price target of $169 implies an 11% upside from its current level.