By Barbara Kollmeyer
It isn’t too late to “join the party.”
That’s according to analysts at Baird, who on Thursday upgraded shares of Tesla /zigman2/quotes/203558040/composite TSLA +3.16% to outperform and lifted their price target to $488. The electric-car maker late Wednesday reported a fifth straight quarter of profit and sales that climbed 40%. Chief Executive Elon Musk described the July-September period as Tesla’s “best quarter in history.”
In a note to clients, Baird analysts Ben Kallo and David Katter admitted they were “too early” in downgrading the stock to a neutral rating in January, after a longtime bullish position. At the time, they suggested it was time to cash in on gains. Tesla shares have soared over 400% so far this year. Shares are up 5% in premarket trading.
Here’s their mea culpa: “Clearly incorrect, we are now upgrading share as we think TSLA has the substantial access and ability to deploy capital, and has multiple ways to drive substantial revenue growth.”
But better late than never on that upgrade, they suggest. “Tesla’s competitive moat over peers is substantial (and growing, enabled buy rapid capital deployment) and we think it is unlikely traditional OEMs [original equipment manufacturers] will be able to effectively compete over time,” said Baird analysts.
“We view Tesla as a ‘must own’ stock for investors looking for exposure to ESG, sustainability and disruptive technology trends,” they added.
Kallo and Katter recently upgraded their price target to $450 from $360, ahead of the latest nudge higher.
Elsewhere, Dan Ives at Wedbush left his own neutral rating on Tesla intact, in a note that was released ahead of the earnings call. What’s important, said Ives, was the fact that Tesla “reiterated its goal of 500,000 vehicles for the year.”
Ives noted that Tesla’s cash from operations was $2.4 billion, ahead of their own estimates. “This sustained level of profitability is key for the bulls and speaks to a business model which is staying out of the red ink despite this unprecedented COVID-19 dark storm,” he said.