Don’t Underestimate Tesla’s Impending Break into the Truck Market
Whether or not investors are lackluster on buying into CEO Elon Musk’s empire Tesla Inc (NASDAQ:TSLA) that has yet to turn a profit in sixteen quarters or yield positive cash flow is a separate story, says Deutsche Bank Rod Lache.
Underappreciating the capacity for the electric car giant to break into the truck market might be a big undoing for investors who dare to make this oversight. While the company’s mass-market Model 3 is stealing the show these days, Lache notes that existing truck makers should be preparing to be toppled by Musk’s forthcoming electric semi-truck, remembering the ominous words of Piper Jaffray analyst Alexander Potter: “Commercial vehicle makers — and their suppliers — would be wise to stymie their laughter […]”
Though Lache believes that “disruption to this market may come sooner, and Tesla may play a larger role than is widely expected,” he surveys from a vantage point of cautious optimism, reiterating a Hold rating on shares of TSLA with a $320 price target, which represents a just under 9% downside from current levels. (To watch Lache’s track record, click here)
“We expect Tesla’s Electric Trucks to come soon, with SOP in late 2018 based on plans to utilize slightly less vertical integration (Tesla does not see any reason to make their own Cabs or Gliders), and common sourcing with Tesla’s light vehicles (uniquely possible for EV’s). Tesla’s leadership in AI/Autonomous Driving could also represent a significant advantage in the eyes of fleet operators. We believe that Autonomous Vehicles will be deployed sooner than expected. And we do not believe that there are significant regulatory obstacles (Autonomous Cars/Trucks are allowed as long as they comply with Federal Motor Vehicle Safety Standards —i.e. they must have steering wheels, brakes, etc., even if there is no driver),” contends the analyst.
Most of Wall Street sides with Lache on the sidelines, as TipRanks analytics indicate TSLA as a Hold. Out of 17 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 7 remain sidelined, and 5 are bearish on the stock. With a loss potential of nearly 11%, the stock’s consensus target price stands at $311.46.
Apple Won’t Win Over Amazon in Connected Home- But Competitive Moat Can Still Get Stronger
Is the right question whether Apple Inc. (NASDAQ:AAPL) can ever beat rival Amazon’s Echo in the race to dominate the voice-driven home appliance market?
Barclays analyst Mark Moskowitz believes the more pressing query is less whether Apple will forever play second fiddle to Amazon in the “home connected hardware market,” as more importantly, it matters that Apple can succeed all the same.
In a playing field where Amazon’s Echo stands in the “pole position,” with Moskowitz venturing an evolution underway for user interaction in a home connected hardware world “[shifting] from mobile to voice,” Apple’s HomePod does not really have a good chance as a dark horse in the pack.
As such, with Amazon “in the driver’s seat” in the home market, and Apple’s HomePod “95% more expensive” when up against Amazon’s $179 Echo, the analyst maintains an Equal Weight rating on AAPL with a price target of $146, which represents a close to 10% downside from where the shares last closed. (To watch Moskowitz’s track record, click here)
There glimmers some promising potential for Apple in the Connected Home market nonetheless, as the analyst projects there is a $307 billion opportunity in revenue that could hit within the next three years, between $134 billion in hardware sales coupled with $173 billion in services-meets-software-meets-advertising sales.
Moskowtiz surmises: “If Apple can carve out a bigger presence in the Connected Home, we believe that the company will further increase the stickiness of its ecosystem. However, we are skeptical that the company will be able to leverage its position to generate material revenue, at least near-term. Reason being, we view the HomePod as an ancillary offering to both the Connected Home and the Apple ecosystem more broadly […] we view the HomePod through a similar lens as the Apple Watch in that the product may generate buzz […] On the bright side, if iOS and iPhone are used as the central control panel of the Connected Home, it will be even more challenging for users to change platforms, in our view. This will further strengthen Apple’s moat and eventually lead to higher device sales in the long term.”
The rest of the Street goes to the bulls when it comes to the tech titan, as TipRanks analytics demonstrate AAPL as a Buy. Based on 34 analysts polled by TipRanks in the last 3 months, 25 rate a Buy on Apple stock while 9 maintain a Hold. The 12-month average price target stands at $170.87, marking a 5% upside from where the stock is currently trading.