Though Cowen and Drexel Hamilton are divided on Tesla Inc (NASDAQ:TSLA) and Apple Inc. (NASDAQ:AAPL), whether bearish or bullish, everything is riding on Tesla’s Model 3 ramp and Apple’s 10th anniversary edition of the iPhone. Though one analyst continues to project beneath buyside expectations, he believes investor sentiment will not be shaken should the Model 3 earn the key vote of confidence Tesla needs. Conversely, another analyst backs Apple all the way, even amid the unveiling of “cool” Samsung devices, as he finds this is Apple’s smartphone market game to lose. Let’s take a closer look:
Tesla’s Key to Unlocking Investor Confidence: Model 3
Cowen analyst Jeff Osborne is out with a research report on Tesla ahead of what he projects to be a release of 23,000 deliveries at the start of the upcoming week. A lot of pressure is facing the electric car giant from the analyst’s standpoint, as the way he sizes up Tesla, all shareholder “sentiment hinges on [the] Model 3 ramp.”
On back of an “asymmetric risk/reward profile,” the analyst reiterates an Underperform rating on shares of TSLA with a $155 price target, which represents a 7% increase from where the stock is currently trading.
Osborn notes, “Our estimate is at the low end of buyside expectations of 23,000-24,500, which we believe are not fully accounting for delays in EPA approval of the new 100 kWh battery-based vehicles until mid-March, as well as softer trends in Jan/Feb.”
“While deliveries may be softer than investor expectations, all eyes will likely be on Model 3 comments and order growth rates for the S/X. Recent quarters have shown 50-70% growth in S/X orders; however, deliveries haven’t shown that pace. Commentary about 2H17 growth in core S/X sales is also in focus given saturation fears,” continues the analyst.
Overall, “While we expect some softness in 1Q17 deliveries, potentially by a 1k-1.5k units versus buyside expectations, we don’t believe this will cause a stir with investors long the stock given the impending ramp of the Model 3,” concludes Osborne who places a great deal of pressure riding on the Model 3 ramp as the ultimate “key to investor confidence.”
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, Jeff Osborne is ranked #4,452 out of 4,555 analysts. Osborne has a 39% success rate and faces a loss of 16.8% in his annual returns. When recommending TSLA, Osborne earns 0.0% in average profits on the stock.
TipRanks analytics demonstrate TSLA as a Hold. Out of 16 analysts polled by TipRanks in the last 3 months, 5 are bullish on Tesla stock, 5 remain sidelined, and 6 are bearish on the stock. With a loss potential of 11%, the stock’s consensus target price stands at $246.67.
Apple iPhone Unbeatable, So No Samsung Apprehension Here
Drexel Hamilton analyst Brian White remains adamantly bullish on Apple, even following Samsung’s Galaxy UNPACKED 2017 event, where Apple’s rival brought “two, cool new smartphones” to the table. However, the analyst believes Apple investors have no reason to start quaking in fear, as between Samsung’s combustible Galaxy Note 7 and Apple’s heavy iPhone 8 hype, in a battle of Samsung vs. Apple, Apple takes the clear victory.
Therefore, continuing to praise the tech giant as globally underestimated and with great enthusiasm for the upcoming fall launch of “iPhone ‘The Great,'” the analyst reiterates a Buy rating on AAPL with a price target of $185, which represents a 28% increase from where the shares last closed. Additionally, considering Apple is back on the revenue growth train as of the first fiscal quarter of this year, momentum seems to be rolling on the giant’s side.
White opines, “Given a healthy uptake with the iPhone 7/7 Plus at Apple and the Galaxy Note 7 fiasco at Samsung, Apple made claim to the #1 position (i.e., unit market share from IDC) in the smartphone market during 4Q:16 for the first time since 4Q:11. Moreover, the arrest of Samsung’s heir apparent/de facto leader (Lee Jae-yong; Vice Chairman) for bribery charges and the pre-trial hearing has provided further distractions at the company.” Should Samsung trip once more, its competitive edge in the smartphone market might irrevocably be dented, which would further propel Apple’s standing in the tech stratosphere.
“Given the reported cases of the Samsung Galaxy Note 7 catching fire and exploding, we believe consumers will be more apprehensive about buying a new Samsung device this time around. Moreover, this year is the tenth anniversary for the iPhone and the excitement around the upcoming iPhone is greater relative to years past, thus we believe potential buyers of the S8/ S8 Plus may wait for the new iPhone to be unveiled. That said, Samsung’s flagship ‘S’ phones have proven to be solid devices over the years,” White contends.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Brian White is ranked #152 out of 4,555 analysts. White has a 64% success rate and garners 10.3% in his yearly returns. When recommending AAPL, White gains 24.0% in average profits on the stock.
TipRanks analytics show AAPL as a Buy. Based on 37 analysts polled by TipRanks in the last 3 months, 29 rate a Buy on Apple stock, 6 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $153.07, marking a 6% upside from where the stock is currently trading.