This year has been a hectic one for the electric automaker, which has seen its shares slip nearly 18 percent year to date. It is closing in on a $2.6 billion acquisition of solar energy provider SolarCity, of which Tesla CEO Elon Musk is chairman. And reports of fatal Tesla car crashes in the U.S. and abroad have pushed the stock lower after prompting questions about safety of the company’s self-driving technology.
Tesla opened down over 2 percent Thursday after Cowen initiated coverage of the stock with an underperform rating and a price target of $160, which is about 20 percent below the price that is it currently set at.
Cowen said that the company which from the onset was positioned to do well even in the long term has some challenges facing it. he said that they have material execution risk to be seen in the coming 12 to 18 months. He added that the SolarCity acquisition will add nothing new, but will instead add more layers of complexity.
To Cowen, Tesla should be focused on completing the Gigafactory (the company’s Nevada lithium-battery factory) and the launch of its Model 3.
Erin Gibbs, the equity chief investment officer with S&P Global, said Wednesday while being featured on CNBC’s “Trading Nation”, said she is of the opinion that Tesla is more of a complete sell for various reasons.
According to Gibbs, he said that Elon Musk has the habit of making targets that appear to be wonderful, but hardly achievable.
Gibbs said the company’s proposed acquisition of SolarCity announced earlier this year is nothing but a “distraction,” adding that it is a “drain on the cash flow that ought to have been pushed into the company as it can do with the money so that it can continue to grow especially after the conference call of November 2014 that Musk forecasted growth in a short period of time.
Others may be less bearish on the automaker.
On what Craig Johnson, senior technical research analyst at Piper Jaffray, said Wednesday on “Trading Nation,” he said that put into a buy-sell-category, that he will take the risk. Accoring to him, a break below $180 is a big change when it comes to sentiments concerning stock.
Johnson noted that from the standpoint of technical view, the stock has been wallowing sideways for the better part of the last three years.
The average rating of Tesla, according to FactSet data, is a “hold,” though estimates show its $243.53 average target price is calculated to be about 23 percent above its current price.
Johnson said if investors are looking for names that will outperform in the last few months of the year, Tesla won’t be among them.
He said he would not waste time to move on to Apple or other attractive names.