Analysts Delve Into the Tale of Two Stock Giants: Tesla Inc (TSLA) and Apple Inc. (AAPL)

Colin Rusch gives rundown after TSLA meeting; Daniel Ives: Much fuel left in' AAPL's tank with iPhone X.


Tesla Gives Alibi for Model 3 Production Delay

Oppenheimer analyst Colin Rusch is out highlighting key takeaways on Tesla Inc (NASDAQ:TSLA) after hosting a dinner with the electric car giant as well as a circle of debt and equity investors. Gross margin looks like it remains as a key sign of Tesla’s manufacturing expertise as well as points to its profitability prospects down the line, says Rusch, who also now has deeper understanding behind delayed Model 3 production.

Explaining that it appears a few suppliers have floundered in delivering on prompt schedule, Rusch notes that in reaction “at least one of those suppliers has been fired replaced by in-sourcing.”

Additionally, when considering prospective lithium shortages, which Tesla is taking “very seriously and working aggressively to mitigate,” the analyst predicts: “We would not be surprised to see fixed long-term contracts put in place as part of this de-risking for TSLA.”

Offering his overall cautious gist of the management meeting, Rusch concludes: “Management said it was targeting a minimum deployable cash balance of $1.5B- $2.0B for the foreseeable future. The company indicated it would likely continue to access the capital markets opportunistically, given the unprecedented access to capital the platform has, provided that TSLA continues to see opportunities to invest the capital. TSLA pegged internal investment return hurdles at 30%-40% IRRs for each of its business lines. We continue to believe the shares will track progress of the Model 3 units and gross margin, recognizing long-focused investors largely expect further delays. We understand the delay in the truck launch has been due to production resources being redeployed to Model 3 de-bottlenecking.”

Following these various updates presented at last Thursday’s meeting, the analyst reiterates a Perform rating on TSLA stock without suggesting a price target. (To watch Rusch’s track record, click here)

Wall Street believes Rusch is smart to play it safe when it comes to the giant’s prospects ahead, as TipRanks analytics reveal TSLA as a Hold. Out of 21 analysts polled by TipRanks in the last 3 months, 6 are bullish on Tesla stock, 7 remain sidelined, and 8 are bearish on the stock. With a loss potential of nearly 8%, the stock’s consensus target price stands at $324.07.TSLA analyst ratings chart

“Living Under a Rock?” Apple’s iPhone X Cycle to Be Its Strongest Yet

GBH Insights analyst Daniel Ives takes a research jump into Apple Inc. (NASDAQ:AAPL) to examine from a bullish stance how magnified of a wave the tech titan’s iPhone X factor will produce- not only for Apple, but also the smartphone industry’s future path forward.

Will the launch of the iPhone X mark the final days of a massive growth age for Apple or is this the start of a beautiful “super cycle?” Ives believes it is important to recognize the “forest through the trees.” Though the analyst forecasts supply chain challenges that will spin out the iPhone X upgrade cycle “well into” fiscal 2018, he likewise pinpoints the upgrade cycle as a mega “growth catalyst for Apple (and its investors) over the coming year.”

In fact, the analyst would not be surprised to see this product cycle as “the strongest iPhone product cycle to date,” and therefore rates Apple a Highly Attractive rating on the GBH Value Matrix with a blended valuation target range between $190 and $200, which implies a 19% to 25% increase from current levels. (To watch Ives’ track record, click here)

Apple shares rest on an axis of the iPhone X upgrade cycle, argues Ives, who believes its “success, ASP ramp, and growth trajectory” will spell out the future of this tech titan. “While there has been a near-term pullback on shares in light of soft iPhone 8 demand out of the gates and OLED/facial recognition related product issues out of Asia that have pushed/delayed iPhone units’ sales out a few months, it’s all about how big of an upgrade cycle the iPhone X will be for FY18 and beyond in our opinion,” the analyst writes.

One integral root of Apple’s gravy train pivots on “pent up demand,” with Apple in good standing here between a mighty iPhone installed base already about 2 and plus years old of over 350 million users and “strong China growth returning back to the Apple story in what we believe is a $200 billion linchpin opportunity in this all-important region over the next three years.”  Demand across the world could be hankering to get their hands on the revolutionary tenth anniversary edition model of the iPhone with all of its “transformational” gadgetry.

Ives contends: “In sum, this is a ‘white knuckle’ period for Apple, the smartphone industry, tech food chain, and its investors to see if Apple can prove a ‘super cycle’ is on the horizon with iPhone X over the next 12 to 18 months to help fuel its next leg of growth, cash flow generation, and product expansion.”

Most analysts on Wall Streets are out rooting for this tech titan to be a winning stock pick, as TipRanks analytics showcase AAPL as a Strong Buy. Based on 30 analysts polled by TipRanks in the last 3 months, 23 rate a Buy on Apple stock while 7 maintain a Hold. The 12-month average price target stands at $175.69, marking a nearly 10% upside from where the stock is currently trading.AAPL analyst ratings chart