U.S. stocks trimmed their opening gains Thursday as more Americans filed new claims for US unemployment insurance benefits last week, suggesting that labor-market growth remained weak in early May.
Among the equities in focus are electric car giant Tesla Motors Inc (NASDAQ:TSLA), iPhone maker Apple Inc. (NASDAQ:AAPL) and online retail giant Amazon.com, Inc. (NASDAQ:AMZN). Here’s a quick roundup of today’s brokerage notes on TSLA, AAPL, and AMZN.
Tesla Motors Inc
Evercore ISI analyst George Galliers was out pounding the table on Tesla Wednesday, after the company said last week that it was stepping up production plans for its upcoming Model 3 mass-market sedan and would build a total of 500,000 all-electric vehicles in 2018.
Galliers raised his price target for Tesla from $310 to $320, while reiterating a Buy rating on the stock.
Galliers wrote, “Producing 500k units in 2018 sounds like a big number, for a company which produced only 51k units in 2015. This is Tesla’s target. And as with many of Tesla’s historical targets, it is ambitious and will prove a stretch. However, it should not be viewed as impossible or unachievable. At c500k units p.a., Tesla would only be in the Top 25 OEMs globally. And Tesla’s production would account for c50bps of global light vehicle production, barely moving the needle.”
The analyst continued, “On our numbers, we have Tesla delivering c394k units in 2018; approximately 100k units short of the targeted production of c500k units. Assuming that by the end of 2018 Tesla is running at an annualized production rate of c11k units per week, then the shortfall equates to approximately one quarter behind schedule. Tesla’s ability to produce 500k units in 2018 is far from a foregone conclusion.”
However, “With volume mass production coming sooner rather than later, we believe the Tesla equity story is stronger and more tangible than ever. Using a DCF valuation, we increase our Target Price.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst George Galliers has a yearly average return of 0.2% and a 33% success rate. Galliers has a -6% average return when recommending TSLA, and is ranked #2371 out of 3913 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 37%, the stock’s consensus target price stands at $285.
Adnaan Ahmad, former Berenberg analyst, released a bearish note on Apple shares, reiterating a Sell rating and $80 price target, which reflects a potential downside of 12% from last closing price.
Ahmad wrote, “Mr Market is now going to be squarely focused on gross margins and average selling price (ASP) development. Bulls will argue that the bar has been reset for earnings with a lower volume, ASP and gross margin trajectory than they had forecast at the beginning of the year. They will exclaim that Apple remains cheap and a value‐play given that margins are sustainable at this lower level and that one should treat the stock as a bond and clip a coupon on an annual basis. My view is the opposite, margins and ASPs have only just started to get squeezed and as this persists, Apple’s value investors are going to start to question the underlying premise of their investment thesis, i.e. sustainability of margin structure.”
The analyst concluded, “Moving forward, with demand tepid, Apple’s gross margin, in my view, is going to suffer from a) some of that leverage turning negative, b) mix to worsen (more SE and increased iPad), c) less benefit from warranty accruals and d) its FX hedges roll‐over (hedging contract gains). Component costs should remain weak, but given recent statements by SK Hynix on pricing, these could be bottoming soon.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Adnaan Ahmad has a yearly average return of 0.7% and a 58.% success rate. Ahmad has a -13% average return when recommending AAPL, and is ranked #1983 out of 3913 analysts.
Out of the 50 analysts polled by TipRanks, 39 are bullish on Apple stock, 9 are neutral and 2 are bearish. With a return potential of 44%, the stock’s consensus target price stands at $130.86.
Cowen analyst John Blackledge reiterated an Outperform rating on shares of Amazon, with a price target of $830, after Amazon competitor Macy’s reported fiscal first-quarter revenue that missed expectations and cut its profit outlook for this year.
Blackledge noted, “We continue to believe AMZN’s Apparel & Accessories business is one of the key drivers of AMZN’s “EGM” segment, which comprises ~80% of total US eCommerce revenue. We estimate the US Apparel business will grow from $16 billion Gross Merchandise Value (GMV) in 2015 to $52B GMV in 2020. This implies a gain in U.S. Apparel & Accessories market share from 5% to 14%, and that AMZN will displace Macy’s as the #1 US Apparel retailer by 2017.”
Furthermore, “We estimate US Apparel accounts for mid-teens percent of US EGM GMV. AMZN’s success is being driven by accelerating Apparel purchaser growth in ’15 and continued strong growth in 1Q16, per our proprietary monthly survey data. Purchaser growth strength due to i) dramatically larger selection, ii) ramping first-party brand relationships, iii) superior fulfillment and iv) technology / imaging.”
According to TipRanks.com, analyst John Blackledge has a yearly average return of 0.7% and a 49% success rate. Blackledge has a -2.7% average return when recommending AMZN, and is ranked #1761 out of 3913 analysts.