UBS analyst Colin Langan downgraded the rating on Tesla Motors (TSLA, Financial) from Neutral to Sell. Additionally, the price target was lowered from $220 to $210.
According to the UBS report, "The stock has jumped +40 percent since the anticipation of the storage announcement; however, our analysis indicates that TSLA's current planned 15GWs of storage capacity may be larger than the market in 2020."
UBS followed Deutsche (DB) in downgrading the firm and this happens after the stock reached an all-time high at $292 in September and was trading at $285 the past days.
Impressive Revenue Growth
The company achieved great revenue growth. In the first quarter, revenue grew by more than 50%, while losses almost tripled year-over-year.
The electric vehicle manufacturer posted quarterly revenue of $939.9 million from $620.54 million, a gain of 51.5% when compared to the same quarter last year. However, Tesla also reported a loss of $154.18 million in the quarter, or $1.22 per share, which is more than 3 times the $49.8 million loss or $0.40 per shares, the company posted in the first quarter of the previous year. Then it was disclosed that Q1 results include a $22 million hit of foreign currency effects, while the cost of its revenues increased by 46% y-o-y.
Model S
Tesla delivered 10,045 units of its Model S vehicles during Q1, a 55% increase year-over-year. Enhancements to the Model S sedan including a “Ludicrous Mode” option that goes from zero to 60 miles (97 kilometers) per hour in 2.8 seconds and a 90 kilowatt-hour battery that provides more range.
“With the announcement today, we are improving both the low end and the high end,” said Chief Executive Officer Elon Musk in a call with reporters. “We will continue to make improvements.”
Model X
The company plans to sell the Model X in China during the first half of next year. Further, Tesla will introduce the model in Japan in early 2016. Further, the firm plans to expand its reach in South Korea, which has a relatively small automobile market, but promising outlook.
Final Comment
The company continues to advance in technology, which allows the firm to reach better performance than its peers.
The main question covers the issues of valuation, or overvaluation, while most analysts still rating the stock a buy. Most analysts have a bullish opinion on the bank: 4 Sell Rating(s), 8 Hold Rating(s), 13 Buy Rating(s). When looking at the consensus price target, it stands at $289, a 0.72% upside potential, which we think is extremely poor.
The stock has closed yesterday at $282.66, or just 3.4% away from the September record close. In a year-to-date basis, the company returned 21.3%. Tesla’s shares plummeted more than 4% in pre-hours trading to $270.75.
Other hedge funds managers such as Louis Moore Bacon (Trades, Portfolio), Murray Stahl (Trades, Portfolio) and Ron Baron (Trades, Portfolio) have increased their previous positions in the stock in the first quarter.
Disclosure: Omar Venerio holds no position in any stocks mentioned
