Tesla’s Got a Lot of Exciting Irons in the Fire
Tesla Inc (NASDAQ:TSLA) encouragingly has indicated upside to its deliveries for the third quarter, revealing a 19% quarterly rise to 26,150 units, thanks to 54% from the electric car giant’s Model S and 45% from its Model X.
Guggenheim analyst Rob Cihra notes that though the “Model 3 has barely just begun,” as Model 3 production is just a preliminary work in progress for now, “multiple potential catalysts still [lie] ahead,” and he cheers Tesla’s outclass of his 24,500 deliveries forecast.
As such, the analyst reiterates a Buy rating on TSLA stock with a price target of $430, which represents a 22% increase from where the stock is currently trading. (To watch Cihra’s track record, click here)
Though the beginning of Model 3 production merely hovers at 260 units, which is a far cry from Cihra’s expectations angling for 1,000 vehicles, and targets circling near 1,500 from “early manufacturing bottlenecks,” the analyst cares about the value of long-term prospects. Cihra explains: “[…] we think judging Model 3 on its first couple months vs. the breakthrough potential we expect it to deliver over the next 3yrs would be extremely short-sighted. Model 3 only just started production in July (a target few even thought would be met) and with orders >450K, we continue to see supply set up to chase demand for the next 2-3yrs, and Model 3 set up to drive meaningful revenue, margin and FCF leverage as its volume ramps off the high fixed-cost structure Tesla has been building.”
Thankfully, “We do not believe Tesla has seen any fundamental/technical hurdles, and rather just a 2-3 week slower start in Model 3’s ramp as it ironed out miscellaneous issues,” the analyst writes, noting, “We expect its ambitious target to ramp Model 3 production to a rate of 5K units per week by the end of 2017 may now push into 1Q18E, but we were not that optimistic in our near-term numbers to begin with.”
The Gigafactory from Cihra’s eyes remains pivotal to the successful ramp of CEO Elon Musk’s Model 3, and though he anticipates “the Gigafactory ramp to still prove as much a bottleneck as anything,” reassuringly, he spotlights “no hurdles in cell production.” With a Tesla electric semi-truck ready to make its debut by the end of this month, Cihra roots for Tesla’s path towards profitability, remaining more bullish than the Street.
Wall Street is not convinced by Musk’s electric car giant empire despite its powerful branding, as TipRanks analytics exhibit TSLA as a Hold. Out of 20 analysts polled by TipRanks in the last 3 months, 6 are bullish on Tesla stock, 7 remain sidelined, and 7 are bearish on the stock. With a loss potential of nearly 11%, the stock’s consensus target price stands at $310.93.
Fitbit’s Long-Term Opportunity in Digital Health Has a Healthy Glow
Fitbit Inc (NYSE:FIT) shares took a slight 3% hit yesterday amid the arrival of its new $299 smartwatch Ionic that may lack the interactive features and sleek construct of its competitors.
One Wall Street voice cares to disagree: Oppenheimer analyst Andrew Uerkwitz glanced at both the smartwatch as well as new Flyer Bluetooth earbuds and left his meeting with FIT Investors Relations head Tom Hudson all the more enthusiastic on the wearable fitness tracker makers’ opportunity ahead.
In reaction, the analyst maintains an Outperform rating on FIT stock with an $8 price target, which implies a 20% upside from where the shares last closed. (To watch Uerkwitz’s track record, click here)
Uerkwitz understands there is room for improvement with the Ionic, but bigger picture likes FIT’s trajectory moving forward: “We walked away more confident in Fitbit’s positioning for digital health: a fitness-first smartwatch offering advanced sensors, an easy-to-use interface, and a broader array of hardware (earbuds and scale). We believe the company has taken the first steps toward meaningfully expanding its target audience. We say first steps, as despite liking many things, there are additional features we believe will be needed to better compete. Ionic feels rushed, a little incomplete for the smartwatch category. However, there are plenty of signs to show the company is moving in the right direction (Fit Coach, SPO2 sensor, long battery life). Overall, we are comfortable rating the stock Outperform based on valuation, long-term digital health positioning, and large TAM.”
The nitty-gritty for Uerkwitz is that “Fitbit is on the right track,” as the analyst contends: “With expectations low, FIT doesn’t need a mega hit. It just needs to show it understands what is needed for the coming digital health era: an easy-to-use device that provides robust data, coaching, and a long battery life. We are satisfied with Fitbit’s first smartwatch.”
Cautious optimism circles the tech player, as Wall Street is not quite as sure as Uerkwitz on its prospects, with TipRanks analytics demonstrating FIT as a Buy. Based on 7 analysts polled by TipRanks in the last 3 months, 3 rate a Buy on Fitbit stock while 4 maintain a Hold. The 12-month average price target stands at $6.00, marking a nearly 10% downside from where the stock is currently trading.