Oppenheimer analysts are sharing divided takes on Tesla Motors Inc (NASDAQ:TSLA) and Ctrip.Com International Ltd (ADR) (NASDAQ:CTRP) on back of the official closed TSLA deal to take over Solar City and CTRP’s recently released third-quarter financial results. Let’s dive in:
Tesla: Remaining on the Sidelines
On the heels of the closing of the Tesla/Solar City deal, Oppenheimer analyst Colin Rusch reiterates a Perform rating on shares of TSLA without listing a price target.
For now, the analyst remains cautious amid “fierce competition” facing SCTY, considering he estimates 65% of system sales and loans will be needed to break-even operationally. However, the Gigafactory ramp though deemed a “tricky project” could be the key to bringing forth material cost savings while bolstering supply security. Yet, the analyst opines, “Manufacturing hiccups and supply chain reconfiguration could prove challenging and costly. We expect a January tour to shed light on progress.”
Moreover, Rusch highlights, “With the Solar City acquisition now closed, we believe TSLA shares will track execution on the Model 3 ramp and trade within a range depending on quarterly Model S and X sales and GM. With initial production scheduled for 2017 along with ramp of the Gigafactory and the Buffalo solar facility we believe the company has its hands full and would not be surprised by delays given the magnitude of the company’s agenda.”
“We believe the company is also seeing the beginning of used inventory and what we believe is the challenge of introducing a consumer electronics type product cycle into a durable goods end market. We continue to monitor the company’s capital spending/ solar financing and expect a multi-pronged strategy,” Rusch contends.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Colin Rusch is ranked #574 out of 4,245 analysts. Rusch has a 46% success rate and earns 7.2% in his annual returns. When suggesting TSLA, Rusch garners 88.9% in average profits on the stock.
TipRanks analytics demonstrate TSLA as a Hold. Out of 13 analysts polled by TipRanks in the last 3 months, 3 are bullish on TSLA stock, 6 remain sidelined, and 4 are bearish on the stock. With a return potential of nearly 7%, the stock’s consensus target price stands at $210.80.
Ctrip.Com: 3Q Margin Beat and Global Footprint Expansion
Ctrip.Com posted earnings on November 23rd with a strong margin beat that has Oppenheimer analyst Jed Kelly providing a confident forecast for the company. Moreover, with the online travel leader broadening its global footprint through its acquisition of travel meta-search provider Skyscanner for £1.4B, or $1.7 billion, the analyst sees the company in a stellar position.
On back of the quarterly print, Kelly reiterates an Outperform rating on CTRP with a price target of $55, which represents a nearly 24% increase from where the shares last closed.
For the quarter, CTRP brought in non-GAAP operating income 32% above the analyst’s projection and 35% ahead of consensus, carried by sales and marketing (S&M) leverage coupled with Qunar lodging profitability. Meanwhile, third-quarter gross profit growth has been “outpacing” revenue, with an 86% year-over-year surge, compared to 75%, which reveals a limited value-added tax (“VAT”) and competition impact. Additionally, accommodation revenue rose 51% and transportation revenue grew 101% year-over year, compared to second quarter’s respective growths of 61% and 90%. Kelly believes, “We attribute the hotel deceleration to VAT (5-10%) and transportation acceleration from improving airline relationships. Business tax impact is expected to be 0% going forward.”
Fourth-quarter revenue guidance calls for a range of 70% to 80%, which the analyst considers as reflective of a stable competitive environment. Fourth-quarter non-GAAP operating margin is 9%, just under the Street, although the analyst adds, “this appears conservative based on S&M leverage from lower competitive pressures.”
“We believe CTRP will leverage Skyscanner’s platform to expand China outbound opportunities, while improving efficiencies around air-ticketing and packaged trips. The acquisition is likely not overly-accretive medium term, however with the purchase price representing just ~7% of EV, and Skyscanner’s strong European brand, we believe execution risk is relatively low and not disruptive to CTRP’s long-term value proposition,” Kelly surmises.
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, top five-star analyst Jed Kelly has achieved a high ranking of #95 out of 4,245 analysts. Kelly has a 72% success rate and realizes 27.2% in his yearly returns. When suggesting CTRP, Kelly yields 42.5% in average profits on the stock.
TipRanks analytics indicate CTRP as a Strong Buy. Based on 7 analysts polled by TipRanks in the last 3 months, all 7 rate a Buy on CTRP. The 12-month average price target stands at $54.71, marking a nearly 24% upside from where the stock is currently trading.