Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

Thursday’s Market Insights: Tesla Inc (TSLA) Explodes, Fitbit Inc (FIT) Soars

Tesla Inc

Tesla Inc (NASDAQ:TSLA) is booming after reporting a second quarter beat. The controversial auto stock announced revenue of $2.79 billion and non-GAAP EPS loss of $1.73, beating consensus revenue of $2.52 billion and EPS loss of $1.88. Furthermore, the results revealed that the Model 3, launched at the end of July, will see its gross margin improve much more quickly than previously thought.

Guggenheim analyst Rob Cihra commented “We believe the big positive was Model 3 not only started production in July but Tesla is guiding the lower-priced car’s gross margin already turning positive in Q4E, something we had not previously forecast until 2Q18E, toward a target in 2018 of 25.” The fact that the $35,000 Model 3 is currently on target will give Tesla 2 to 3 years of upside leverage says Cihra.

And overall, Cihra gave this optimistic appraisal of Telsa’s outlook: “While recognizing TSLA remains expensive on near-term metrics, we continue to value it on 2020E numbers, expecting the ramp of its new Model 3 to drive revenue and margin growth for several consecutive quarters, as volumes leverage off the high fixed-cost structure Tesla has been building.”

He reiterated his buy rating with a $430 price target- which translates into impressive upside potential of 24% from the current share price. Cihra says he believes that the stock’s rapid growth can enable it to continue to trade at a premium. The analyst has a very strong record both in general and on Tesla stock- on TSLA specifically he has an 80% success rate and a 16.7% average return. (To watch Cihra’s track record, click here)

TipRanks reveals that Tesla has a hold analyst consensus rating. Over the last three months, analysts have published 5 buy, 8 hold and 5 sell ratings on the stock. With the share price spiking, the average analyst price target of $297.43 now represents a downside of just -14% downside from the current share price. However, notice that there is a very wide range of price targets from $165 on the low to $464 on the high.

Fitbit Inc

Fitbit Inc (NYSE:FIT) shares are soaring by over 14% in today’s trading, after the wearable device maker reported its earnings results for the second quarter after the market close. Strong results gave the market confidence that Fitbit is now set up for an attractive second half of the year.

The wearable fitness device marker reported revenue of $353 million with a loss per share of $0.08. The results easily beat consensus expectations of $341.6 million and a loss per share of $0.15. In particular, Fitbit’s Blaze outperformed expectations in the quarter and was the #1 selling smartwatch outside of Apple Watch. The report also revealed that management is successfully reducing its previously too-high US channel inventory through promotional pricing.

On the news, top Oppenheimer analyst Andrew Uerkwitz reiterated his buy rating on Fitbit with a bullish $8 price target (40% upside potential). Uerkwitz, who has a four-star rating on TipRanks, says FIT is a clear market leader which “is best positioned to capitalize on a potentially evolving healthcare environment, where wearables use is incentivized to the consumer by doctors and other healthcare providers.”

Fitbit has a hold analyst consensus rating. We can see that in the last three months the stock has received 3 buy, 5 hold and 1 sell rating. Meanwhile the average analyst price target of $6.93 stands at a big 20.5% upside from the current share price.



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