Analysts Weigh In on Three Earnings Plays: Tesla Motors Inc (TSLA), Cisco Systems, Inc. (CSCO), Zynga Inc (ZNGA)

Volatile trade continued on U.S. markets as concerns about global economic weakness intensified, even as Federal Reserve Chair Janet Yellen reiterated her confidence in the U.S. economy. Among the equities in focus today are electric vehicle giant Tesla Motors Inc (NASDAQ:TSLA), network equipment maker Cisco Systems, Inc.(NASDAQ:CSCO), and social gaming failure Zynga Inc (NASDAQ:ZNGA).

Tesla Motors Inc

Tesla shares are trading nicely higher today, up nearly 7%, on a well-received earnings report. While financial results missed estimates across the board, TSLA reiterated 2016 positive guidance of 80k-90k deliveries and expects to ramp automobile gross margins throughout 2016.

However, Deutsche Bank analyst Rod Lache remains sidelined, reiterating a Hold rating on the stock.

Lache observed, “Execution was somewhat disappointing, as results were negatively affected by the slower than expected ramp up of the Model X, and significantly higher than expected OpEx. That said Street expectations have clearly turned cautious. And in this context, investors should react favorably to new disclosures about demand trends, underlying margins, the manufacturing ramp, cash flow guidance (the need for a capital raise is diminishing), and the timing of the Model 3 launch.”

The analyst continued, “We maintain a constructive stance on TSLA’s long term potential, as we believe in the cost convergence of Electrification vs. Internal Combustion, we believe that Tesla will be in a strong position as this phenomenon becomes more apparent, and we believe that demand for Tesla’s upcoming products could dwarf expectations. That said, our neutral stance reflects significant execution risks (Including uncertainty over what happens to Model S demand after the lower cost Model 3 is revealed).”

According to, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Rod Lache has a yearly average return of 10.3% and a 62% success rate. Lache has a 10.3% average return when recommending TSLA, and is ranked #208 out of 3569 analysts.

Out of the 23 analysts polled by TipRanks, 10 rate Tesla stock a Buy, 7 rate the stock a Hold and 6 recommend a Sell. With a return potential of 74%, the stock’s consensus target price stands at $268.78.

Cisco Systems, Inc.

UBS analyst Steven Milunovich reiterated a Buy rating on shares of Cisco Systems, while slightly reducing the price target to $29 (from $31), after the company posted solid fiscal second-quarter earnings despite a tough macro. Cisco shares reacted to the results, rising nearly 10% as of this writing.

Milunovich commented, “Cisco reported a mixed quarter but one good enough to boost the oversold stock. Revenue of $11.8bn (ex-STB business) beat consensus of $11.7bn as did non-GAAP EPS of $0.57 vs $0.54 (aided 1.5 cents by a low tax rate). Declines in switching and data center were offset by strength in routing and security. Business slowed in January, the last three weeks of the quarter. Macro weakness is offset by a conservative 2% revenue boost in the April quarter due to the extra week, resulting in 1-4% growth guidance. The 24% dividend hike was a powerful statement of sustained profitability.”

According to, analyst Steven Milunovich has a yearly average return of -3.3% and a 33% success rate. Milunovich is ranked #2927 out of 3569 analysts.

Out of the 32 analysts polled by TipRanks, 22 rate Cisco stock a Buy, 8 rate the stock a Hold and 2 recommend a Sell. With a return potential of 23%, the stock’s consensus target price stands at $30.27.

Zynga Inc

Finally, Wedbush analyst Michael Pachter reiterated an Outperform rating on shares of Zynga, while reducing the price target to $4.25 (from $5.50), after the company released disappointing earnings report, sending shares down 14% Tuesday. While there are several strong underlying trends, particularly in advertising and the Slots franchise, overall bookings and audience growth remain challenged.

Pachter commented, “Initial Q1:16 guidance is bookings of $150 – 165 million and adjusted EBITDA of $(10) – 0 million, compared with prior consensus for $172 million and $8.5 million. The company expects to launch ten new games in 2016, with CSR2 and Dawn of Titans now expected in 2H:16. Its former CEO promised one or both of those games at the “cusp” of 2014/2015. In February 2015, both games were announced for release later that year, and in late 2015, they were delayed into 2016. Many expected the games in 1H:16, reflected in the uptick in consensus estimates. Once again, the time frame (at least relative to expectations) shifted to later in the year, and it is clear that consensus estimates will come down.”

“The lack of interest hasn’t deterred Zynga management, who appears to us to recognize that it must restore credibility lost when the long-awaited turnaround dragged into its third year,” the analyst concluded.

According to, analyst Michael Pachter has a yearly average return of -11.3% and a 32.5% success rate. Pachter has a -16.7% average return when recommending ZNGA, and is ranked #3515 out of 3569 analysts.

Out of the 17 analysts polled by TipRanks, 3 rate Zynga stock a Buy, 12 rate the stock a Hold and 2 recommend a Sell. With a return potential of 78.5%, the stock’s consensus target price stands at $3.29.


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