Guggenheim analyst Rob Cihra is out with a bullish forecast on Tesla Inc (NASDAQ:TSLA) and Apple Inc. (NASDAQ:AAPL), as he sees Silicon Valley is taking Motor City to task, with the ultimate tech disruption of an over $2 trillion automotive market. Cihra sees the electric car giant and the tech giant as “ripe” for pioneering the revolution as self-driving cars pair the best of the auto and tech world.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Rob Cihra is ranked #736 out of 4,555 analysts. Cihra has a 57% success rate and realizes 10.6% in his annual returns. When recommending TSLA, Cihra yields 17.5% in average profits on the stock. When suggesting AAPL, Cihra garners 37.1%.
Let’s take a closer look:
Tesla at the Forefront of Next-Gen Auto Revolution
Believing autonomous car technology carries greater magnitude than simply “tech and autos,” the analyst reiterates a Buy rating on shares of TSLA with a $320 price target, which represents a just under 6% increase from where the stock is currently trading.
Cihra opines, “Electric vehicles (EVs) still make up <1% of annual car sales, with hurdles including high upfront purchase price, long charging times and ‘range anxiety.’ But, we believe Tesla is showing there is real demand and key is that using batteries puts EVs on a technology-levered declining $/kWh cost curve. Moreover, fully-autonomous cars on-demand could obviate most of today’s EV hurdles.”
“We reiterate our BUY rating on Tesla (TSLA), which we see pioneering many of the key directions in next-gen auto. A risk is Tesla trying to vertically integrate too much itself (e.g., building cars and their parts right in Silicon Valley, software and chip design, retailing, even solar), which requires a lot of up-front capital and multiple vectors of execution, but we see its end-to-end model and >$2T addressable TAM providing meaningful ultimate leverage,” surmises Cihra.
TipRanks analytics demonstrate TSLA as a Hold. Out of 17 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 6 remain sidelined, and 6 are bearish on the stock. With a loss potential of 8%, the stock’s consensus target price stands at $274.55.
Apple’s Project Titan a Go?
Apple could be in solid standing as the world begins to beckon in a new era of “horsepower” in self-driving cars, with these high-tech vehicles also relying more and more on the software that renders them as “data centers on wheels.”
“Tech’s draw to the auto market is not just that it looks ripe for hardware+software disruption but its sheer size, with today’s auto TAM >5X the smartphone market and an ultimate opportunity another 5X bigger still as self-driving could entirely revolutionize global transportation,” notes the analyst.
Overall, “We reiterate our BUY rating on Apple (AAPL), where involvement in cars has so far just included CarPlay for infotainment and Siri voice control, but Apple has been investing in autonomous EV technology through Project Titan. While lately speculated in the media to be pulling back, we think Apple nonetheless still ultimately launches a car, drawn in by the auto market’s sheer size and hardware+software tech disruption, multiple close parallels to its traditional MO, manufacturing and environmental impact,” Cihra contends.
As such, the analyst reiterates a Buy rating on AAPL with a $180 price target, which represents a 27% increase from where the shares last closed.
TipRanks analytics exhibit AAPL as a Buy. Based on 37 analysts polled by TipRanks in the last 3 months, 28 rate a Buy on Apple stock, 7 maintain a Hold, while 2 issue a Hold on the stock. The 12-month average price target stands at $152.93, marking an 8% increase from where the stock is currently trading.