U.S. stocks started the fourth quarter on a weak note following a mixed batch of economic data and amid crude oil’s ongoing resurgence. Among the equities in focus on Smarter Analyst today are electric car giant Tesla Motors Inc (NASDAQ:TSLA) and Google parent Alphabet Inc (NASDAQ:GOOGL). Let’s take a closer look:
Tesla Motors Inc
As Tesla hopes to acquire SolarCity (NASDAQ:SCTY), Oppenheimer analyst Colin Rusch believes that although the deal has good odds to still go through, the timeline could face a bump in the road. Specifically, Rush notes the SEC review process will likely face a delay in the midst of pending litigation, due to a recent SCTY installation fire from March 19 under investigation as well as the “incremental risk” of an IP lawsuit, filed by SPWR and Khosla Ventures against SCTY for stealing IP to create a solar roof shingle product.
The analyst contends, “The date of record for the shareholder vote is set, but note that adjustments to the S4 have focused on board indemnification, and we expect the recent lawsuit from SunPower and Khosla Ventures to also be included in another amendment.” Rusch adds, “We believe extension to the timeline is likely to work against the deal given the risk of ongoing collaboration to trigger gun-jumping rules even with relief from SCTY’s immediate financial pressure due to two asset deals and strong TSLA deliveries of 24.5K in 3Q16 (vs. consensus at 22K-23K) supporting bullish arguments.”
From the analyst’s perspective, when the electric car giant initially raised capital back in May of 2016, a lot of investors were under the impression the SCTY acquisition was already in the works, which Rusch believes is “evidenced” by the various lawsuits that already had been filed.
“While it’s difficult to handicap, we believe ongoing litigation signals the risk that additional damaging information may become public,” Rusch concludes.
As such, Rusch reiterates a Perform rating on shares of TSLA without listing a price target.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Colin Rusch is ranked #562 out of 4,197 analysts. Rusch has a 46% success rate and realizes 7.4% in his annual returns. When recommending TSLA, Rusch garners 88.9% in average profits on the stock.
TipRanks analytics exhibit TSLA as a Hold. Based on 13 analysts polled in the last 3 months, 3 rate a Buy on TSLA, 6 maintain a Hold, while 4 issue a Sell. The 12-month price target stands at $222.33, marking a nearly 5% upside from where the shares last closed.
Alphabet’s senior vice president of Google Cloud and former VMware CEO Diane Greene announced a total “Google Cloud” reorganization of all its cloud-based products, technology, and services. The package includes Google Cloud Platform, G Suite (once called Google Apps for Work), Machine Learning tools and APIs, the enterprise maps APIs, and Android phones, tablets, and Chromebooks that access the cloud.
Additionally, Alphabet Inc is introducing a new customer engagement model called Customer Reliability Engineering, where Google engineers and a customer’s operations team will integrate to shoulder critical cloud applications responsibilities.
As Alphabet makes steps to continue its cloud brand and portfolio growth with an approach focused on consumers, Merrill Lynch top analyst Justin Post reiterates a Buy rating on GOOGL with a $960 price target, which represents a 19% increase from where the shares last closed.
The analyst believes, “We view today’s announcements as a clear message that Google remains committed to the cloud. While total revenue contributions today are relatively small, we see potential for the segment to grow to $7bn over the next four years. In the meantime, our recent ad spend checks suggest the mobile cycle remains strong and only moderate y/y revenue deceleration in 3Q, which we think is in line to slightly better than expectations.”
“Looking out six months from now, we think sentiment can improve as we estimate Google will still be growing Website revenue around 19% and the Street will likely be looking forward to easier comps,” Post concludes.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, top five-star analyst Justin Post has achieved a high ranking of #15 out of 4,197 analysts. Post upholds a 77% success rate and gains 19.9% in his yearly returns. When recommending GOOGL, Post realizes 25.5% in average profits on the stock.
TipRanks analytics demonstrate GOOGL as a Strong Buy. Based on 32 analysts polled in the last 3 months, 31 rate a Buy on GOOGL, while 1 issues a Sell. The consensus price target stands at $943.36, marking a 17% upside from where the stock is currently trading.