Jefferies analyst Philippe Houchois upgraded Tesla to Buy last week while Credit Suisse's Dan Levy just raised the stock to Neutral
Shares of Tesla (TSLA) continue their recent rise after Credit Suisse analyst Dan Levy upgraded the stock to Neutral as he believes the company "competitively has more edge" in the transition to electric vehicles amid the COVID-19 disruption. Nonetheless, the analyst still expects demand to soften in the second quarter and believes Tesla could see supply shortages if the shutdown lasts until June.
BETTER POSITION AMID COVID-19: Credit Suisse analyst Dan Levy upgraded Tesla to Neutral from Underperform and raised his price target on the stock to $580 from $415. Amid the COVID-19 disruption, Tesla "competitively has more edge" in the transition to electric vehicles, Levy told investors in a research note issued this morning. The analyst believes that the coronavirus pandemic will make it more difficult for legacy automakers to balance the long-term shift to electric vehicle in the face of near-term cycle disruption. However, he acknowledged that in the near-term, Tesla may face risks with demand expected to soften in the second quarter and given potential supply shortages if the shutdown lasts until June.
BUY TESLA: Last week, Jefferies analyst Philippe Houchois upgraded Tesla to Buy from Hold with a price target of $650, down from $800. Despite reducing Tesla's estimates, the analyst said he still sees 2020 revenue growth of 27%. The company's earnings and free cash flow will be supported by better productivity, stable average selling prices and income from zero-emission vehicle credits, Houchois contended. Further, he argued that Tesla is the only "legacy-free" carmaker and is participating in "a positive EV sum-game." Post COVID-19 crises, Houchois also expects higher consumer support for energy efficient transport.
SALES, DELIVERY STAFF ON FURLOUGH: Tesla has told employees that the majority of its sales and delivery staff are going to be on furlough starting this week, Electreck's Frederic Lambert reported. In an email obtained by Electrek, Tesla's head of HR explained that all salaried employees that can work from home or are assigned "critical roles" are taking a temporary pay cut from 10% to 30% depending on their level in Tesla's payscale. The rest would be put on furlough without pay and would rely on unemployment.
TESLA SEEKS RENT REDUCTIONS: Meanwhile, Tesla has reached out to some of its landlords about possible rent reductions, The Wall Street Journal's Tim Higgns and Esther Fung reported, noting that the company is looking for savings after closing much of its business. The report cited an email from the company to its landlords stating that, "The rapid world pandemic that is now affecting our country has led Tesla to make strategic decisions to ensure the company's long-term success and growth. As a result of the increasing restrictions on our ability to conduct business, we would like to inform you that we will be reducing our monthly rent obligations effective immediately."
BUY APTIV IF 'CANNOT STOMACH' OWNING TESLA: While lowering his price target on Aptiv (APTV) to $88 from $108 and keeping an Overweight rating on the shares, Piper Sandler analyst Alexander Potter said he would recommend the stock for auto tech investors "who cannot stomach owning" his favorite stock, Tesla. Shares of Aptiv have not fully recovered from a steep selloff in March, and remain 40% below the new $88 price target, Potter highlighted. Further, the analyst noted that the company has the liquidity to withstand a two-year downturn that rivals the financial crisis in severity.
PRICE ACTION: In morning trading, shares of Tesla have jumped about 10% to $716.60. The stock has roughly doubled in a month, rising from the $353.46 price it was trading at on March 18.