Tuesday, March 28, 2023
HomeMarket'Buy' Calls on Tesla Stock Keeping Piling Up. The Cybertruck Is Key.

‘Buy’ Calls on Tesla Stock Keeping Piling Up. The Cybertruck Is Key.

Tesla’s Cybertruck.

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Courtesy Tesla

has been controversial, both as a company and as a stock, since it made its debut with public investors in 2010. That was probably inevitable given its iconoclastic CEO, Elon Musk, and the fact that its technologyis designed to disrupt a century-old industry.

The stock is still subject to a lot of debate, but Tesla (ticker: TSLA) has quietly become as popular as it has ever been on Wall Street.

Tuesday evening, Barclays analyst Dan Levy launched coverage of the automotive sector. He rates Tesla shares at Buy and has a target of $275 for the price. He also rates
Rivian Automotive
(RIVN) shares at Buy, with a stock-price target of $28.

Those are the only two auto makers he rates Buy. He has
Ford Motor
(F) and
General Motors
(GM) at Hold, and the EV startup
(FSR) at Sell.

Levy points out that Tesla has strong financials and is leading in EVs as that technology accounts for a bigger share of the global auto market. “Recessionary pressures” such as lower car pricing, meanwhile, are keeping him on the sidelines as it relates to GM and Ford.

And “while Rivian faces a number of challenges in ramping capacity/achieving greater production efficiency and ultimately reaching positive margins and cash flow, we nevertheless believe [it] s positioned to take solid share in the inflecting North American EV market,” Levy wrote.

he said, has a good product in the Ocean SUV, but likely will eventually need more capital.

Levy, who was at
Credit Suisse
until late last year, also rated Tesla stock at Buy in that job. (Credit Suisse doesn’t cover Tesla stock right now.) Still, his latest call is a new Buy rating, which pushes the total to 31, from 30, according to FactSet. That number of Buys is a record for Tesla stock.

Another reason Wall Street is increasingly high on Tesla is the rollout of the Cybertruck in 2023. Truist analyst William Stein conducted a survey and found that the oddly shaped vehicle will be a hit.

“Ever since Tesla first showed the Cybertruck in 2019, its unusual angular design stirred controversy,” wrote Stein on Wednesday. He said that because most investors he spoke with expected the truck to be a dud, he surveyed 504 customers and found that 6% of pickup truck buyers are considering an all-electric power train. What’s more, 3% of respondents said they intended to buy a Cybertruck.

Those numbers imply Cybertruck could capture up to 50% of the growing electric-truck segment. “Implicit interest in the Cybertruck appears much stronger than the bearish view,” added the analyst. For context, Ford and Rivian together sold about 33,000 electric trucks in 2022.

Stein rates shares at Buy and has a target of $245 for the price.

Overall, about 66% of analysts rate shares at Buy. That is almost a record too. The figure was 67% in 2012, but that included only 10 Buy ratings—no surprise, given that Tesla was much smaller back then. The average Buy-rating ratio for stocks in the
S&P 500
is about 58%

The average target for the stock price among analysts is at about $209 a share, while the difference between the highest and lowest calls is more than $300. That amounts to about 150% of the current stock price, compared with respective spreads of 125% and 50% for GM and
(AAPL), indicating there is still some controversy about Tesla on Wall Street.

The new Buy rating from an old fan appeared to help Tesla stock in premarket trading, giving it a gain of almost 2%, but the shares slipped back to $208.50, for a loss of 0.4%, by mid morning. The
S&P 500
Dow Jones Industrial Average
were both down 0.6%.

Write to Al Root at allen.root@dowjones.com

Credit: marketwatch.com

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