Tesla’s (TSLA) Biggest Bull Keeps His Price Target at $430; Here’s Why
Tesla (TSLA) shares have been on a rollercoaster ride over the past few days. In case you’ve been living in a cave, here’s a quick newsflash.
Last Thursday, the SEC filed securities fraud charges against Tesla CEO Elon Musk causing the stock to lose 14%. The SEC had alleged that Musk either knew or was reckless in not knowing that statements made about his go-private plans were false or misleading. Following two tumultuous days, Musk has settled with the SEC, agreeing to step down as chairman for 3 years and add 2 new independent directors, with him and Tesla each paying a $20 million in penalties. Investors saw the initial settlement agreement as a decent and quick solution to the charges, sending shares soaring nearly 17% in Monday’s trading session.
In reaction, Guggenheim analyst Rob Cihra, Tesla’s biggest bull, reiterates a Buy rating on TSLA, with a $430 price target, which represents a potential upside of 38% from where the stock is currently trading. (To watch Cihra’s track record, click here)
Cihra commented, “A quick, positive outcome, we expect investors can now get back to focusing on TSLA’s fundamentals, which we believe are building meaningful upward momentum as high-volume Model 3 production now drives positive profit + cash flow leverage in 2H18E.”
“We continue to forecast Tesla’s economics now starting to flip from cash-burn to cash generation off the big vertically-integrated fixed-cost structure it has been building; as its execution hurdles progressed from battery module production 2-3 quarters ago, then to automated general assembly, to now simply the logistics of shipping/ hauling Model 3 deliveries fast enough,” the analyst continued.
But the Street does not share this optimism. Right now, Tesla stock has a Hold analyst consensus rating with only 7 recent Buy ratings. This is versus 10 Hold and 10 sell ratings. Meanwhile, the $319.35 price target suggests a slight upside from Monday’s closing price. (See TSLA’s price targets and analyst ratings on TipRanks)