Most of the analysts who rate the stock a buy are focused on coverage of technology companies, while a majority of those who advise investors to sell are dedicated to automobiles.
The Wall Street split on electric-car maker Tesla boils down to analysts who see the next Apple and those who perceive a lot more similarity with Studebaker.
Most of the seven analysts who rate the stock a buy are focused on coverage of technology companies, while a majority of the six who advise investors to sell are dedicated to automobiles, according to data compiled by Bloomberg and Sanford C. Bernstein & Co.
While the tech folks are homing in on the potential for disrupting the century-old auto industry, those who concentrate on manufacturing efficiency and vehicle reliability see the stock’s valuation as out of line with reality.
The issue was highlighted in a note from Bernstein on Tuesday, which featured technology analyst Toni Sacconaghi making the bullish case for Tesla and autos analyst Max Warburton arguing that shares should head lower from here. After the stock’s 42 percent surge over the past year, it is now well above the average target price from analysts surveyed by Bloomberg.
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“Tesla is a disruptive company, with a once-in-a-generation leader,” Sacconaghi wrote. “It is the next Apple Inc., Netflix Inc., Amazon.com Inc., and Elon Musk is a uniquely visionary leader with track record of doing the impossible.”
He sees electronic vehicles comprising almost 40 percent of auto sales within two decades, and says Tesla is well positioned to take advantage of the shift as one of the first manufacturers and one of the brands with the best reputation among consumers.
Warburton, the auto analyst, disagrees. He cites the company’s inability to make money so far, the sky-high price for its automobiles and concerns about quality.
“Tesla’s single biggest challenge now is to ramp up production, yet its manufacturing capabilities are dismal, its quality poor and its approach wild,” he wrote, adding that he expects output of the Model 3 to take much longer to accelerate than Musk is claiming.
Tesla has seven buys, 10 holds and six sells with an average price target of $274.87, according to data compiled by Bloomberg. The stock closed Friday at $325.14.