Tesla Inc (TSLA) Model 3 Roll-Out Prompts Price Target Boost, Micron Technology, Inc. (MU) Denies Report of Major Malfunction


Tesla Inc

Earlier this week, Tesla Inc (NASDAQ:TSLA) CEO Elon Musk confirmed that the much-anticipated Model 3 electric car makes its debut this month, aiming to have 30 cars produced in July, and 20,000 by the end of the year. In reaction, Guggenheim analyst Rob Cihra raised his price target for TSLA from $380 to $430, while reiterating a Buy rating for the stock. (To watch Cihra’s track record click here.)

Cihra commented, “With estimated Model 3 reservations of ~400K units already before the car has even launched, Tesla is currently telling customers that orders placed today will not be delivered until mid-2018 or later, with our own estimate that today’s pre-orders will soak up Tesla’s Model 3 production right through to 2Q19E. While some question the dependability of refundable $1K deposits, we look at the flip-side, with most of the population still not even knowing what a Model 3 even is yet, so that ~400K preorders might rather far under-count ultimate initial demand. 2H17E initial ramp rate will remain a big variable S-curve, with Elon Musk tweeting a target of 30 cars in July, 100 in Aug, >1500 in Sept and then jumping to the company’s existing goal of exiting 2017E at 5K/week (now saying 20K per month in Dec), in which case its goal of 10K/ week sometime in 2018E would look quite doable.”

The bottom line: “With Model 3 now starting, we expect 2-3 years of upside leverage to also now start as volumes ramp off Tesla’s high fixed-cost structure, prompting us to reiterate our BUY rating and increase our price target.”

Out of the 17 analysts polled by TipRanks (in the past 3 months), 6 rate Tesla stock a Buy, 7 rate the stock a Hold and 4 recommend to Sell. With a downside potential of 13%, the stock’s consensus target price stands at $298.14.

Micron Technology, Inc.

Micron Technology, Inc. (NASDAQ:MU) denied a report on Wednesday that a nitrogen gas dispensing system malfunction had led to the contamination of wafers and equipment in Micron’s fabrication facility in Taiwan and that some output had to be scrapped. However, the semiconductor giant did confirm that there had been a minor incident and that it had no impact on the business.

Mizuho analyst Vijay Rakesh commented, “We were able to catch up with MU. We believe the nitrogen disruption was minor, unlike how the DRAMExchange news read, and there was no material production impact […] The lack of any news from MU, was hinting that the issue might be more benign than thought. Overall small disruptions tend to be more price constructive; especially against a backdrop of limited DRAM capacity into 2H17. In the MayQ, MU DRAM ASPs were up 14% q/q. Having worked in a Fab, sometimes a nitrogen line contamination might be as easy as catching or detecting it on time, a line Flush, and re-qualification and could see the fab back to production faster.”

As such, Rakesh reiterates a Buy rating on MU stock, with a price target of $38, which implies an upside of 27% from current levels. (To watch Rakesh’s track record click here.)

Out of the 20 analysts polled by TipRanks (in the past 3 months), 17 are bullish on Micron stock, two remain sidelined, and one is bearish. With a return potential of nearly 32%, the stock’s consensus target price stands at $39.94.