Tesla beat analyst estimates for fourth-quarter profit and revenue Wednesday afternoon, and the subsequent stock spike prolonged the automaker’s strong rally in 2020.
The company announced its Model Y CUV would reach delivery sooner than expected, and projected it would „comfortably exceed“ 500,000 total deliveries in 2020, a 36% gain from last year’s figure.
The earnings win saw Tesla shares jump as much as 12% to hit a record-high price of $650.88 per share.
Here’s what four analysts said about the soaring stock price and fourth-quarter earnings win.
Tesla bested analyst estimates with its fourth-quarter report on Wednesday afternoon, prolonging its stock surge through 2020 and easing fears of a continued supply struggle.
The automaker’s stock soared as much as 12% Thursday following the blockbuster report. Tesla beat expectations for both quarterly profit and revenue, and noted its 2020 deliveries would „comfortably exceed“ 500,000 vehicles compared to 2019’s 367,500.
The company also accelerated the rollout of its Model Y CUV, saying a „production ramp“ started in January and deliveries would begin by the end of March.
The earnings win drove Tesla shares to an all-time high of $650.88 per share. The stock has already notched several record highs through the new year, granting a hefty compensation package for CEO Elon Musk and establishing the firm as the highest-valued automaker in the US.
Tesla traded at $640.50 per share as of 3:10 p.m. ET Thursday, up about 55% year-to-date.
Here’s what four analysts have to say about Tesla after its positive fourth-quarter figures and surging stock price.
Piper Sandler: „Tesla’s thriftiness continues to impress“
Foto: sourceTesla
Price target: $729
Rating: Overweight
Tesla’s frugality helped the automaker end the quarter with 6.3 billion in free cash, and its success in strategically deploying capital to boost vehicle deliveries prompted a price target upgrade from Piper Sandler’s analysts.
„Predicting capex is a challenge, but Tesla keeps under-spending our estimates, so we’re cutting our forecast to more closely reflect the company’s actual performance,“ the team wrote. „Tesla’s thriftiness continues to impress.“
The company’s strategic investments are set to push deliveries to a lofty record in 2020, and „demand remains a non-issue“ with several new models set to hit markets in the coming years, the analysts wrote.
Despite exciting launches for the Model Y, Semi, and self-driving software on the horizon, the next event to watch is Tesla’s „battery day,“ they added. Power cells are shaping up to be a limiting factor in the company’s production ramp-up, and any positive updates to battery technology or new suppliers could lift a downward pressure for the automaker.
Wedbush: „The bull party will continue“
Foto: Tesla CEO Elon Musk introduces the Cybertruck.sourceAP Photo/Ringo H.W. Chiu, File
Price target: $710
Rating: Neutral
Noted Tesla bull Dan Ives viewed the company’s latest report as „potentially game-changing,“ as stable profitability and healthy cash flow secured Tesla’s spot as a lasting player in the EV space. The 500,000-deliveries estimate is „conservatively positive,“ Ives said, and the company could deliver as many as 550,000 vehicles in 2020 and support a continued rally for the soaring stock.
„The bull party will continue as the aggressive trajectory of Giga 3 production and demand out of Shanghai look very strong out of the gate,“ the analyst wrote.
Wedbush also updated its long-term bull case for the automaker, noting that Tesla shares could reach $1,000 if it can ramp up production in Shanghai and drive demand in China in the years to come. The firm’s new Tesla price target reflects heightened demand for EVs, and past fears around improving production rates are quickly fading, the note said.
„For Musk, despite all the noise over the last year and balancing a myriad of projects at Tesla (while running SpaceX and launch targets) last night completes a „comeback story for the ages“ from the dark days seen last April,“ the team wrote.
Canaccord Genuity: „The leader of the EV revolution“
Foto: Elon Musk at the unveiling of Tesla’s new RoadstersourceTesla
Price target: $750
Rating:
Canaccord Genuity now stands as Wall Street’s biggest Tesla bull, with their latest price target implying a 16% upside from Thursday’s opening price. Though the new target is based on a lofty 2021 EPS projection of $25.03, the firm believes Tesla’s opportunity in „disrupting the legacy transportation industry“ warrants such rapid profit growth.
The analysts also praised Tesla’s advantage in the battery, echoing other firms in emphasizing the importance of its upcoming battery tech event. The automaker’s „greatest near-term risk“ is its Shanghai factory’s exposure to the coronavirus, the analysts noted. If the outbreak is efficiently contained in the coming weeks, Tesla is on pace to reach numerous records in the new year, Canaccord Genuity added.
„Given the numerous positive data points that were discussed and the cornerstone of of continued profitability and free cash flow generation, we view the company as solidly positioned as the leader of the EV revolution,“ the analysts wrote.
CFRA Research: „Unfavorable at current levels“
Foto: Tesla Inc CEO Elon Musk poses with Tesla China-made Model 3 vehicle owners onstage during a delivery event at its Shanghai factory in China January 7, 2020.sourceREUTERS/Aly Song
Price target: $440
Rating: Sell
Despite the massive earnings beat, not all firms lifted their doubts on Tesla’s future growth. The stock’s current risk/reward scenario is „unfavorable at current levels,“ and risks surrounding the Chinese factory’s ramp-up could quickly pull shares lower, CFRA analyst Garrett Nelson wrote.
Tesla failed to report capex figures related to its new factory in Germany, Nelson said, leaving investors in the dark as to whether the facility reaches regular production as efficiently as the Shanghai factory. The analyst downgraded Tesla stock to „sell“ from „hold,“ and his new price target implies a 32% tumble from its Thursday opening price.
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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
