- Canaccord changes rating from “hold” to “buy”
- Shares up by 2.2%
- Company not fully appreciated by Wall Street, analysts say
Shares in Tesla saw gains on Monday after Canaccord Genuity analysts upped their price recommendation.
Prices for the flagship Model 3 have been lowered by the electric car and Canaccord changed its rating on Tesla from “hold” to “buy” while increasing the price target to $450 a share.
An upcoming bond conversion issue didn’t influence the decision; Canaccord said that a current cash balance estimated at $3.7 billion means the company isn’t fully appreciated by Wall Street investors.
Canaccord Analyst Jed Dorsheimer explained: “We believe the last two quarters and recent guidance for Q1 have removed significant concerns for both production capability and profitability of the critical Model 3. As such, we see a more stable 2019 with far fewer concerns for investors in the company.”
“We view the recent string of price cuts as further proof that the cost cutting and right sizing that the company has undertaken are resulting in concrete movement towards the ultimate goal of an affordable $35,000 Model 3,” Dorsheimer added.
At the start of trading on Monday, Tesla shares increased by 2.3% to trade at $312.84 each.
Next month, the recently troubled company faces a $920 million payout unless share prices rise past $359.87 each when investors in a previously-issued convertible bond will be able to choose between shares in the company or cash. However, Tesla assured investors last month that it had “sufficient cash on hand to comfortably settle in cash our convertible bond that will mature in March 2019.”
The company’s quarterly revenue reached $7.23 billion with non-GAAP EPS of $1.93, along with cash and cash equivalents of $3.7 billion at the end of the fourth quarter.