Why You Should Be Bearish on Tesla Inc (TSLA) Despite Bullish EV Projections, What to Expect for Apple Inc. (AAPL) Ahead of WWDC


Tesla Inc (NASDAQ:TSLA) has UBS in an interesting quandary- where though the analyst assesses cause for a price target raise amid economic profitable favorability pointing in the favor of electric vehicles, this has no impact on the grander scope of Tesla’s sinking status considering a one-two punch of escalating capital expenditures and quickly advancing competition in the EV arena.

Conversely, Apple Inc. (NASDAQ:AAPL) expert Gene Munster of Loup Ventures weighs in setting expectations for the upcoming global developer’s conference, anticipating an iOS11 update-focused event. Yet, for Munster, it’s all about hints of Apple’s footsteps into the augmented reality field. Let’s take a closer look as to why Tesla’s future seems bearish, but Apple’s seems as bright as ever:

Tesla Gets Price Target Boost- But UBS Still Sounds the Alarm

UBS analyst Colin Langan might see a better future for electric vehicles after his Global Q-Series ran a breakdown of the Chevy Bolt, Tesla’s Model 3 mass-market EV counterpart- and profitable economics look better than initially anticipated. Nonetheless, as Langan warns, you certainly “don’t have to be bearish on EVs to be bearish on TSLA.”

Despite unearthing a more positive stance as far as EV projections, the analyst continues to be bleak on the electric car giant’s short-term numbers as well as a long-term filled with cutthroat rivals gaining an edge in the market. Therefore, the analyst reiterates a Sell rating on shares of TSLA while bumping up the price target from $160 to $185, which represents a 43% downside from where the stock is currently trading.

Langan explains, “Even though we are raising our EV forecast, we remain bearish on TSLA. Not only are the near-term economics still very challenging, but more importantly, we see increased competition from other luxury players (Audi e-tron quattro in 2018, Jaguar I-Pace in 2018, Daimler EQ model line starting in 2019, and Lucid Air in 2019). Our 2025 US EV penetration estimate rises from 3% to 5% as we expect the improving economics will only draw more investment into EVs. Moreover, new EV entrants will benefit from the $7,500 federal tax credit that should begin phasing out for TSLA in 2018.”

Ultimately, “We believe such significant share gains for TSLA would be difficult given competing EV launches in the 2018-20 time-frame. Our bearish view on TSLA is further reinforced by TSLA’s capital needs given rising capex in H2, investments in charging infrastructure, dealers, and service centers, and Model Y investment,” concludes the analyst.

According to TipRanks, four-star analyst Colin Langan is ranked #471 out of 4,571 analysts. Langan has a 60% success rate and realizes 11.3% in his annual returns. However, when recommending TSLA, Langan loses 27.6% in average profits on the stock.

TipRanks analytics exhibit TSLA as a Hold. Out of 18 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 7 remain sidelined, and 6 are bearish on the stock. With a loss potential of 16%, the stock’s consensus target price stands at $272.57.

Apple’s WWDC 100% About Introduction of iOS11 Update

Apple is getting ready to usher in its Worldwide Developers Conference (WWDC) next Monday and Gene Munster – exploring a bullish take from his new research-driven, venture capital firm Loup Ventures – looks forward to the augmented reality reveals from the upcoming iPhone X launch.

Though the analyst expresses a great deal of confidence in the upgraded AR features, he believes Apple will focus on its iOS11 update and wait to unveil the AR elements at the fall launch. There is “100%” certainty” the tech giant will introduce iOS11 and all of its new gadgetry at the event for iPhone and iPad users everywhere. Munster notes, “We continue to expect Apple’s next iPhone, coming this fall, to offer advanced augmented reality capabilities including 3D mapping (a key for AR). At WWDC, we’ll be looking for signs of these new AR features in iOS 11.”

When it comes to what is being heard through the grapevine, Munster gives “60% certainty” to a Siri Home Assistant debut, which he sees as a strategic, savvy computing chess move forward for the giant. “While Apple TV has brought lots of Siri’s functions from the phone to the home, an always-on digital assistant makes a lot of sense for Apple. We see these devices driven by natural user interfaces like voice as the future of computing. And Apple has ground to make up in the market for digital assistants in the home,” opines Munster.

Lastly, the analyst predicts there are 50% odds for new Intel Kaby Lake processor-based Macbook Pros, adding this could be another important step for the giant, harnessing the best of both Apple’s and Intel’s universes. Munster underscores, “The latest MacBook Pro models were introduced in Nov. 2016 but did not leverage the latest Intel processors, which could be remedied at WWDC.”

Overall, the analyst surmises with enthusiasm for the conference, charging, “We’re hoping to see Apple make a big push into more natural, more immersive computing with the introduction of new voice- and AR-based developer tools for Apple devices.”

TipRanks analytics indicate AAPL as a Strong Buy. Based on 31 analysts polled by TipRanks in the last 3 months, 27 rate a Buy on Apple stock while 4 maintain a Hold. The 12-month average price target stands at $164.36, marking a 7% upside from where the stock is currently trading.

  • MisterEman

    “Stormy weather in Shortville…”