efferies analyst Philippe Houchois upgraded Tesla to Buy on accelerating earnings leverage
Welcome to The Fly’s latest edition of “Charged,” where we look back at some recent analysts’ notes, news and activity in the electric vehicle and clean energy space.
ACCELERATING EARNINGS LEVERAGE: To kick off this week, Jefferies analyst Philippe Houchois upgraded Tesla (TSLA) to Buy from Hold with a price target of $850, up from $700. Looking into 2022, he sees higher global battery electric demand, more battery and assembly capacity coming on stream, a broader and “mix-accretive” model line-up with more Model Ys and the new S and “still no legacy issue to contend with,” all of which given Tesla accelerating earnings leverage, Houchois told investors. The analyst acknowledged that with competition accelerating, Tesla “no longer the near-only choice for long-range EVs.” Nonetheless, he thinks industry growth accommodates both new competitors and Tesla. Houchois also raised his 2021-2022 U.S. GAAP EBIT estimates 17% on higher gross margin assumptions.
MUSK MIGHT LOOK TO STEP DOWN: Bernstein analyst Toni Sacconaghi noted in a research note last Thursday that on Tesla’s recent second quarter earnings call, CEO Elon Musk stated that he would not participate in future earnings calls, triggering investor questions about whether there was a possibility Musk might look to step down from being CEO or look to leave Tesla at some point in the near future. The analyst believes several reasons point to the possibility that Elon Musk could step down from his role of CEO of Tesla or leave Tesla altogether, namely him repeatedly expressing exasperation about the demands of being a CEO, his significant business interests outside of Tesla, Tesla now being a viable going concern and arguably needing Musk less than it has in the past, and Musk’s decision to step back from earnings calls.
EMISSION CUTS, EV SALES GOAL: President Biden on Thursday announced a multistep strategy aimed at rapidly shifting Americans from gasoline-powered cars and trucks toward electric vehicles — a central part of his plan to reduce the pollution that is heating the planet, The New York Times’ Coral Davenport reported. The new rules, which would apply to vehicles in the model year 2023, would cut about one-third of the carbon dioxide produced annually by the United States and prevent the burning of about 200 billion gallons of gasoline over the lifetime of the cars, according to a White House fact sheet.
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