Analysts are weighing in on electric automotive giant Tesla Motors Inc (NASDAQ:TSLA), online payment giant Paypal Holdings Inc (NASDAQ:PYPL), and customer review giant Yelp Inc (NYSE:YELP), offering compelling reasons for their ratings and summarizing expectations.
Tesla Motors Inc
Stifel Nicolaus analyst James Albertine was out pounding the table on Tesla Motors Friday, reiterating a Buy rating and price target of $400, which represents a potential upside of 90% from where the stock is currently trading.
Albertine observed, “TSLA remains a formidable automotive manufacturer creating compelling luxury electric vehicles that will span price points, in our view, while remaining early in realizing benefits from stationary storage and its Gigafactory. Our estimates and our valuation outlook reflect a company that should continue to positively disrupt the automotive and utility sectors, unearthing demand for electric vehicles and energy storage that legacy competition has overlooked or otherwise dismissed in its history.”
Furthermore, “Looking at potential risks, in addition to a highly complex production ramp for the Model X, we are hearing growing concerns from our colleagues with respect to softening luxury spending and reduced high income consumer sentiment as of late. This is consistent with commentary from our luxury automotive retail coverage amid weaker than expected 3Q15 results (primarily in the northeast U.S.). Based on TSLA commentary (and perhaps its scale given the ongoing demand/supply imbalance), we do not believe management is witnessing the same slowdown (at this point) in demand for the Model S sedan or Model X crossover utility . However, we continue to monitor the global luxury consumer closely to the extent that reduced sentiment negatively impacts TSLA sales/orders.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst James Albertine has a total average return of 5.3% and a 43.9% success rate. Albertine has a -4.9% average return when recommending TSLA, and is ranked #1204 out of 3842 analysts.
Out of the 15 analysts polled by TipRanks in the last 3 months, 7 rate Tesla Motors stock a Buy, 5 rate the stock a Hold and 3 recommend a Sell. With a return potential of 43.13%, the stock’s consensus target price stands at $301.31.
Paypal Holdings Inc
Piper Jaffray analyst Gene Munster weighed in with a few insights on PayPal, after conducting a deep dive on Venmo, PayPal’s person-to-person payment system, to evaluate different monetization strategies for its domestic peer-to-peer payments.
Munster wrote, “While we believe Venmo is a strong P2P payment offering that will continue to gain share, we see significant challenges monetizing Venmo given 1) numerous competitive and free P2P options, 2) low interest rates hindering float income, 3) limited PayPal in-store merchant acceptance, and 4) an uncertain value proposition for consumers and merchants. We also see more mobile wallets offering P2P over time (reports of Apple Pay and Samsung Pay pursuing P2P). We reiterate our UW rating as we remain skeptical of PayPal’s ability to monetize the Venmo P2P asset and pay-by-Venmo at merchants in a manner that meaningfully contributes to PayPal’s earnings outlook.”
The analyst reiterated an Underweight rating on PYPL, with a price target of $30, which implies a downside of 14% from current levels.
According to TipRanks.com, analyst Gene Munster has a total average return of 24.7% and a 70% success rate. Munster has a 1.9% average return when recommending PYPL, and is ranked #1 out of 3842 analysts.
Out of the 32 analysts polled by TipRanks, 21 rate Paypal stock a Buy, 8 rate the stock a Hold and 3 recommend a Sell. With a return potential of 20%, the stock’s consensus target price stands at $41.90.
In a research report issued today, RBC Capital analyst Mark Mahaney upgraded shares of Yelp from a Sector Perform to an Outperform rating, while raising the price target to $42 (from $34), on the back of a “highly attractive” risk-reward factors. The stock price surged 3% following the recommendation on Friday.
Specific factors: 1. Highly attractive risk-reward. 2. Realistic path to local ad revenue growth stabilization. 3. Strong and improving local solution. 4. Still significant strategic value. 5. Core play on mobile and native advertising growth.
Mahaney wrote, “YELP has been one of the biggest underperformers in the ‘Net sector YTD, down 53%. Per our 10/28 EPS note, this seems excessive to us, despite the modest deceleration in Local Ad Revenue growth rates. Overall, we still view YELP as a top-of-funnel, strong-brand unique asset with downstream transaction capability. Recent integration into Amazon Echo devices, along with Apple Siri and Yahoo! Maps integration, provides some marketplace evidence of Yelp’s unique asset status. Execution risks remain, as does the risk of Google disintermediation, but the increasing Mobile App skew of Yelp usage means that disintermediation risk is declining.”
The analyst concluded, “We are upgrading YELP to Outperform with a new $42PT; largely a risk-reward call. Our upgrade is also based on takeaways from YELP’s presentation at this week’s RBC Technology Conference and from recent meetings with management. Finally, we continue to see unique core and strategic value in YELP.”
According to TipRanks.com, analyst Mark Mahaney has a total average return of 22.1% and a 65.7% success rate. Mahaney has a -28.4% average return when recommending YELP, and is ranked #4 out of 3842 analysts.
Out of the 31 analysts polled by TipRanks, 12 rate Yelp stock a Buy, 17 rate the stock a Hold and 2 recommend a Sell. With a return potential of 42.5%, the stock’s consensus target price stands at $38.82.