Canaccord sets Tesla price target at $450, stock gains

|


  • 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.

Brian Ducey

Brian graduated from Chaminade High School and the University Of Vermont Kalkin School Of Business with a concentration in Finance. He began his career with Knight Capital Markets, working his way to market maker. Brian later expanded his market repertoire, working with various sell-side research brokerage firms, such as Sidoti & Co., and William O’Neill & Co., as an Account Executive. With over 20 years-experience in the financial industry, Brian has built a unique perspective into “market intelligence” understanding an ability to read the tape and apply second level thinking in a fast paced environment. Brian also carried several market licenses, including the series 7, 24, 55, 65, and 63 licenses as well as previously passing The Connecticut Life and Health Insurance Exam