Bloomberg has reported that the US Justice Department opened a criminal probe into Tesla’s (TSLA) go private process, sending shares diving nearly 3% in Tuesday’s trading session. The investigation is in its initial stages and where it’s heading is extremely important.
However, Oppenheimer analyst Colin Rusch remains positive on TSLA, reiterating an Outperform rating with a price target of $385, which represents a potential upside of 34% from where the stock is currently trading. (To watch Rush’s track record, click here)
Despite all the mess, Rusch sees gross margin for Model 3 as the key driver of TSLA shares over the come 2-4 quarters, and given focus on higher priced configurations and higher volumes, the analyst believes the electric giant is likely to hit its 15% target for 3Q:18 and potentially increase it for 4Q:18.
Rusch stated, “With numerous electric vehicle launches over the coming weeks and reports of a criminal probe by the SEC, we believe investor concerns on TSLA continue to be substantial. While we believe results of an SEC investigation are difficult to assess, we believe co-opetition is highly constructive for TSLA in terms of customer awareness and increased infrastructure capacity. But more important, we believe many of the new competing products look disappointing in terms of design and performance, highlighting a product advantage for TSLA. We believe the two critical drivers of TSLA shares are GM on Model 3, on which we believe TSLA is making progress, and secondarily, depth of demand for Model 3, which is likely enhanced by competitor advertising budgets and additional charging stations.”
Net net, Wall Street certainly did not need more reason to be cautious on the electric car titan, as TipRanks analytics exhibit TSLA as a Hold. Out of 27 analysts polled in the last 3 months, 7 are bullish on Tesla stock, 11 remain sidelined, and 9 are bearish on the stock. However, with a potential upside of nearly 10%, the stock’s consensus target price stands at $317.95. (See TSLA’s price targets and analyst ratings on TipRanks)