Where do the bulls and the bears stand when it comes to Tesla Motors Inc (NASDAQ:TSLA) and Baidu Inc (ADR) (NASDAQ:BIDU) on the heels of their quarterly prints? Analysts from Oppenheimer and Brean Capital are joining the earnings conversation to offer mixed perspectives. For Oppenheimer, when considering both sides of the bullish/bearish coin, TSLA turns up somewhere in the middle, as the analyst continues to err on the side of caution. Conversely, Brean Capital while aware of near-term obstacles, the analyst remains positive on BIDU’s long-term growth. Let’s delve deeper:
Tesla Motors Inc
On back of Tesla’s third quarter earnings report delivered Wednesday, Oppenheimer analyst Colin Rusch believes both those leaning bullish and bearish will find what they seek, with the analyst continuing to comment from the middle perspective, sidelined on the electric car giant. As such, the analyst reiterates a Perform rating on shares of TSLA without suggesting a price target.
For its third quarter, TSLA posted non-GAAP EPS of $0.71 on $2.3 billion in revenue, compared to consensus expectations of ($0.22) in non-GAAP EPS and $2.2 billion in revenue, marking a beat on both accounts. GAAP EPS for the quarter reached $0.14. Meanwhile, non-GAAP Automotive gross margin rose to 25%, with shipments of 24,821 coming in slightly ahead of TSLA’s early October guidance of 24,500.
With regards to the fourth quarter, TSLA guides shipments to 25,000, which indicates full year deliveries are “in line” with prior guidance of approximately 80,000 vehicles, compared to the Street’s expectation for 78,000. Additionally, the giant reiterates its Model 3 schedule, with volume production targeted for 2017.
In reaction, Rusch raises his fourth-quarter non-GAAP EPS projection from a loss of ($0.32) up to $0.03, while cutting his deliveries estimate from 26,200 to 25,000.
So why does the analyst tread with caution when it comes to TSLA? From Rusch’s perspective, “TSLA posted automotive revenue modestly ahead of expectations along with GAAP profitability as leasing percentage moved lower and TSLA monetized $138.5M in zero emission vehicle credits (vs. $0 in 2Q16). We believe bulls will point to profitability, cash generation, solid deliveries, and maintaining guidance for Model 3 production in 2017. Bears will pick apart GM given that D&A per delivered vehicle was down $4k/vehicle Q/Q ($8.7k/vehicle vs $12.76k/vehicle in 2Q16), and profitability driven by ZEV credits.”
Ultimately, “We are encouraged by the company’s improved cash management but remain cautious on the ramp of the Model 3 being slower and more expensive than investors expected weighing on shares,” Rusch concludes.
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. According to TipRanks, four-star analyst Colin Rusch is ranked #467 out of 4,188 analysts. Rusch has a 45% success rate and realizes 7.2% in his annual returns. When recommending TSLA, Rusch yields 88.9% in average profits on the stock.
TipRanks analytics indicate TSLA as a Hold. Based on 12 analysts polled in the last 3 months, 2 rate a Buy on TSLA, 6 maintain a Hold, while 4 issue a Sell. The 12-month price target stands at $215.60, marking a 6% upside from where the shares last closed.
Baidu Inc (ADR)
Baidu shares are rising nearly 4%, following the company’s EPS beat in its third-quarter financial results posted yesterday. Brean Capital analyst Fawne Jiang notes a revenue “miss” and “soft” fourth-quarter guidance, but despite assessing that “near-term margin pressure remains,” the analyst reiterates a Buy rating on BIDU while trimming the price target from $197 to $196, which represents an 8% increase from where the shares last closed.
The leading Chinese language Internet search provider reported revenue of RMB 18.25 billion, marking a 0.7% decline in year-over-year, which was a miss in terms of the Street’s expectations for RMB 18.40 billion. For Jiang, this dip can be largely attributed to “11.8% QoQ decrease of number of advertisers partially offset by a 10.2% ARPU increase.” Meanwhile, non-GAAP EPS was posted at RMB 9.92, or approximately $1.49, also outclassing the Street’s projection of $1.09, “largely by an investment gain,” Jiang contends.
For BIDU’s fourth quarter, management guided revenue of RMB 17.84 billion to RMB 18.38 billion, denoting a 1.7% to 4.6% year-over-year decline, underperforming the Street’s expectations of RMB 19.60 billion.
“Tightened regulations and self-inflicted cleanup measures have continued to take a toll on BIDU growth, as evidenced by its weak 3Q results and soft 4Q guidance. This process, while painful in the near term, should help to improve the company’s overall ecosystem with enhanced customer quality and user experience, which could be beneficial to the company’s long-term growth. Management expects the full validation process to be completed in 4Q and core search growth to recover heading into 2017. In addition, BIDU has adopted a more disciplined cost control effort and increasing focus on ROI and profitability, particularly with its O2O business,” Jiang surmises.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Fawne Jiang is ranked #202 out of 4,188 analysts. Jiang has a 54% success rate and gains 7.5% in annual returns. When recommending BIDU, Jiang earns 0.3% in average profits on the stock.
TipRanks analytics demonstrate BIDU as a Buy. Based on 10 analysts polled in the last 3 months, 5 rate a Buy on BIDU, 4 maintain a Hold, while 1 issues a Sell. The consensus price target stands at $184.33, marking a nearly 2% upside from where the stock is currently trading.