As the earnings season roller coaster continues to move, analyst are chiming in on electric car giant Tesla Motors Inc (NASDAQ:TSLA) and Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE:BABA). Let’s take a closer look:
Tesla Motors Inc
In a research report issued today, Dougherty analyst Charlie Anderson reiterated a Buy rating on shares of Tesla Motors, with a price target of $500, after the company released its first-quarter earnings last Wednesday, which met Wall Street’s expectations and gave a bullish outlook for vehicle production on the strength of demand for its upcoming Model 3.
Anderson noted, “The focus coming out of the Q116 report is on management’s decision to pull-forward its production goal of 500K vehicles from 2020 to 2018 (Elon Musk foreshadowed this in an Apr. 1 tweet). While this aggressive schedule certainly increases the risk of nearer-term stumbles, it also significantly pulls forward the earnings power. Tesla has set a goal to produce 1MM vehicles by 2020, roughly 2x what most observers previously believed. Our view is that demand is not the question; it is solving the manufacturing challenges deftly as they come.”
The analyst continued, “We note that pulling forward the production plan has everything to do with Model 3 reservation numbers surprising even the highest ranks within Tesla. We believe suppliers were notified only recently and management noted on the call that there is a July 2017 deadline for volume production of the Model 3. Notably, when we raised our PT to $500 in 4/1, this was based on selling 1.5MM vehicles in 2025. We are slightly nudging that up to 1.6MM (representing a 12% CAGR from 1MM in 2020). We are also assuming a $2B capital raise in our PT buildup and the related dilution. Pulling forward production plans necessitates this as management guided to FY16 capex of $2.25B vs. prior expectations of $1.5B.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Charlie Anderson has a yearly average return of 2.2% and a 47% success rate. Anderson has a average return when recommending TSLA, and is ranked #1509 out of 3904 analysts.
Out of the 25 analysts polled by TipRanks, 12 rate Tesla Motors stock a Buy, 5 rate the stock a Hold and 8 recommend a Sell. With a return potential of 36.9%, the stock’s consensus target price stands at $286.10.
Alibaba Group Holding Ltd
Oppenheimer analyst Jason Helfstein reiterated an Outperform rating on shares of Alibaba Group, while raising the price target to $100 (from $90), on the back of what he calls, “extraordinary F4Q results”, which support Alibaba’s claim of “Asia’s most powerful data & mobile company.
Helfstein noted, “Increasing F17E revenue by 6% on higher GMV, strength of cloud, YOKU/Lazada consolidation, improved take-rate and less FX headwind. Maintaining F17E EBITDA, while margin lowered by 270bps on investment in next-generation drivers. Reducing F17E non-GAAP EPADS by 10%, on lower investment/equity income (long-term strategic bets) and higher share count.”
According to TipRanks.com, analyst Jason Helfstein has a yearly average return of 6% and a 50% success rate. Helfstein has a 12% average return when recommending BABA, and is ranked #337 out of 3904 analysts.