U.S. Earnings Insights: Analysts Weigh In on Tesla Motors Inc (TSLA) and Fitbit Inc (FIT)

Electric car giant Tesla Motors Inc (NASDAQ:TSLA) and fitness tracking giant Fitbit Inc (NYSE:FIT) are on analysts’ radar screens today, as both firms released their first-quarter earnings results. Let’s take a closer look.

Tesla Motors Inc

Yesterday evening, Tesla reported first-quarter results, posting $1.6 billion in revenue and a narrower-than-expected adjusted loss per share of $0.57 (consensus estimates at $0.60). Gross Margins were 21.7%, ahead consensus’ 20.9% estimate. Tesla shares are currently trading at $212.76, down $9.80 or 4.40%.

Oppenheimer analyst Colin Rusch took an in-depth look at the earnings and fundamentals of Tesla and came out with an optimistic view.

Rusch wrote, “Management entertained a wide range of topics on technology development, supply chain management, capital needs, manufacturing capacity, and placement of Elon Musk’s desk and associated sleeping bag, we believe the critical characteristic of TSLA’s business model over the next 24 months will be operating leverage. We believe the company can achieve 15%+ incremental operating margins as it ramps the Model 3. We modeling TSLA reaching 500k vehicles in 2019 vs. the target of 2018, noting the company has a history of setting nearly unachievable goals. Effectively we are accelerating ramp by a year from our previous expectations, but calculate that if the company reaches its 500k vehicle target in 2018 and 1M in 2020, our EPS estimates will prove ~30% too low.”

The analyst reiterated an Outperform rating on TSLA stock, with a price target of $385, which represents a potential upside of 83% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Colin Rusch has a yearly average return of 10% and a 47% success rate. Rusch has a 98% average return when recommending TSLA, and is ranked #303 out of 3901 analysts.

Out of the 25 analysts polled by TipRanks, 12 rate Tesla Motors stock a Buy, 5 rate the stock a Hold and 8 recommend Sell. With a return potential of 27%, the stock’s consensus target price stands at $267.95.

Fitbit Inc

Despite Q1’s beat and full-year guide up, Fitbit shares are falling nearly 17% in late Thursday trading. “Fitbit delivered expected revenue upside but surprised investors by ramping up OPEX investments,” Kathryn Huberty of Morgan Stanley wrote. Huberty reiterated an Overweight rating on the stock, with a price target of $32.

Huberty emphasized her bullish stance on Fitbit, noting, “We continue to like the stock despite back end loaded profitability. Management believes in the company and is investing for the long-term. Fitbit’s products continue to do well with buyers – with Blaze and Alta better than expected – and the company is growing its user base. Building instead of buying software and services features also lowers integration risks even though it drives up OPEX while $792M of cash sits on the balance sheet. Despite the 2Q margin shortfall, these are the right decisions and if they execute, investors will agree over time.”

According to TipRanks.com, analyst Kathryn Huberty has a yearly average return of 14% and a 58% success rate. Huberty has a -31% average return when recommending FIT, and is ranked #103 out of 3901 analysts.

Out of the 22 analysts polled by TipRanks, 12 rate Fitbit stock a Buy, while 10 rate the stock a Hold. With a return potential of 73%, the stock’s consensus target price stands at $24.33.

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