Is Tesla Stock a Good Option for Investors Right Now?

On March 18, Tesla stock (NASDAQ:TSLA) fell 16.0% and closed at $361.22 with a market cap of $66.5 billion. The Dow Jones Industrial Average and the S&P 500 fell 6.3% and 5.2% on the same day, respectively. The broader markets fell as the coronavirus panic intensified. Read Dow Jones Crashes: Are Fed Rate Cuts Really Helping? to learn more.

Tesla’s stock price has fallen 43.1% in the trailing five-day period, while it has risen 34.0% in the trailing 12-month period. The stock is trading 62.7% below its 52-week high of $968.99 on February 4. The stock was also trading 104.1% above its 52-week low of $176.99 on June 3, 2019. On a YTD (year-to-date) basis, the stock has fallen by 13.7% as of Wednesday.

Analysts’ recommendations for Tesla stock

As of Wednesday, 34 analysts cover Tesla stock. Among the analysts, eight or ~24% of the analysts recommend a “buy” for the stock, 13 or ~38% recommend a “hold,” and 13 or ~38% recommend a “sell.” Analysts have an average target price of $492.93 on Tesla. The target price implies a return of 36.5% based on the closing price of $361.22 on Wednesday. The consensus target price for the stock has risen from $492.33 in February—a rise of 0.1%. The highest target price estimate is $1,060, while the lowest is $61.57.

On Wednesday, Bank of America analyst John Murphy upgraded Tesla stock to “neutral” from “underperform.” The analyst increased its target price on the stock from $370 to $500. According to a report from CNBC, “Following the halving of TSLA stock from $900/sh+ a month ago to current ~$400/sh levels, we are upgrading our investment rating on TSLA stock from Underperform to Neutral based solely on valuation.” The report also said, “While we continue to view TSLA as a trailblazer in the electric vehicle market, we believe investor optimism around the company and its business/financial future remains overhyped and litany of risks remain underappreciated, which keeps us relatively cautious on the stock despite the upgrade.”

Today, Morgan Stanley upgraded Tesla stock to “equal weight” from “underweight.” A Morgan Stanley analyst decreased its target price on the stock from $480 to $460. Canaccord Genuity and Baird cut their target prices for the stock from $750 to $400 and $650 to $525, respectively.

Financial performance

In the fourth quarter of 2019, Tesla’s revenue of $7.4 billion beat Wall Street analysts’ consensus estimates by 4.8%. The company’s revenue rose 2.2% YoY (year-over-year) in the fourth quarter of 2019. Tesla’s adjusted earnings of $2.06 were above analysts’ estimates by 19.8%. However, the company’s earnings rose 6.7% YoY in the fourth quarter of 2019.

Analysts expect Tesla’s revenues to rise by 29.3% in 2020 to $31.8 billion. The sales will likely rise by 29.0% in 2021 to $41.0 billion. The adjusted earnings will likely rise from $0.20 in 2019 to $7.82 per share in 2020. However, the profits could rise by 71.6% YoY to $13.42 per share in 2021.

Tesla stock performance

Tesla stock closed 46.3% below its 20-day moving average of $672.89 on Wednesday. However, the stock was 45.0% and 28.8% below its 50-day and 100-day moving averages of $656.53 and $507.50, respectively. Tesla’s 14-day MACD is -199.68, which indicates a downward trading pattern. With a 14-day RSI (relative strength index) score of 24.3, the stock is oversold.

Tesla has an upper Bollinger Band level of $962.50. The company’s middle Bollinger Band level is $672.89, while its lower Bollinger Band level is $383.28. On Wednesday, Tesla stock closed near its lower Bollinger Band level, which also indicates that it’s oversold.

Currently, Tesla stock is trading at 46.19x its fiscal 2020 estimated EPS of $7.82. The stock is trading at 26.92x its fiscal 2021 estimated EPS of $13.42. Wall Street analysts expect Tesla’s earnings to rise at a CAGR of 35.0% over the next five years.

Tesla stock is trending upward in today’s pre-market session. The stock rose by 1.2% at 6:32 AM ET. Read Tesla Stock Turns Negative for the Year after EV Euphoria and Tesla Stock Crashes amid ‘Dumb’ Coronavirus Panic to learn more. Also, read Should You Buy Tesla Stock? Advice from Warren Buffett for more analysis.