Analysts contemplated the future of leading autonomous vehicle manufacturer, Tesla Motors Inc (NASDAQ:TSLA) and domestic airline titan American Airlines Group Inc (NASDAQ:AAL). Let’s take a close look:
Tesla Motors Inc
The Wall Street Journal reported Monday that Tesla Motors Inc is facing fierce scrutiny from the U.S. Securities and Exchange Commission (SEC) after a failure to inform investors regarding May’s fatal automobile accident, caused by a Tesla model acting in Autopilot mode.
UBS analyst Colin Langan notes that the SEC investigation is merely one of a sequence of questionable events submerging Tesla Motors in hot water. In addition to the crash, Tesla did not meet anticipated profit goals in its second quarter. Meanwhile, unease is surging regarding Tesla’s latest acquisition of Solar City, which has cost investors a hefty sum to finance the bail out.
The analyst indicates the purpose of the SEC investigation will be whether to determine if “the accident is considered a material event that a reasonable investor would have deemed important.”
Langan argues against Tesla’s likening of the Autopilot casualty in the context of all US vehicles, contesting that this claim “doesn’t take into account that Autopilot is operated in certain restricted conditions (highway) and with human oversight, while the overall US stats include all environments and a broad range of safety technology.”
Even with adverse publicity in the air, shares are rising against the current of negative media and are now up by 6% since the collision. Langan calls attention to the second quarter estimates overreach wave a red flag as to whether Tesla will have what it takes to meet long-term demands coupled with misgivings regarding consumer interest in Model S; particularly after second quarter results.
The Autopilot fatality also highlights the headline risks associated with aggressive technology roll outs.
Langan reiterates a Sell rating on the stock with a $160.00 price target, marking a 28% downside from where the stock is currently trading.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. Langan is ranked #256 out of 4,055 analysts on TipRanks, with a 59% success rate and an average return of 12.5%.
According to TipRanks.com, 8 analysts rate the stock a Buy, while 8 rate the stock a Hold, and 4 rate the stock a Sell. The average price target for the stock is $266.28 with a nearly 20% potential upside from where shares last closed.
American Airlines Group Inc
Merrill Lynch analyst Andrew Didora weighs in on American Airlines following the news that the company has signed a new credit card agreement with Citi and Barclaycard. In reaction, the analyst raised the price target to $29 (from $27), while reiterating an Underperform rating on the stock.
Didora noted, “While not in our prior estimates, the fact that a new deal was being negotiated was well known by the Street and the economics were generally in line with expectations. We are now folding the agreement into our new 2016 and 2017 EPS estimates of $5.37 and $4.89 from our prior $5.15 and $4.48, respectively.”
Didora is ranked #2,883 out of analysts, on TipRanks, with a 38% success rate and an average loss of 1.8%.
According to TipRanks, 3 analysts rate American Airlines Group a Buy, while 2 rate the stock a Sell. The average price target for the stock is $37.00 with nearly a 3% upside.