Tesla (TSLA) Could Soon Qualify for S&P 500 Addition - Macquarie

Macquarie analyst Maynard Um thinks Tesla (NASDAQ: TSLA) could soon qualify for the S&P 500. After examining requirements necessary for a stock to be added to the S&P 500, Um said TSLA checks off all the boxes for inclusion except aggregate GAAP profitability over trailing 12 months. They forecast this box to be checked in 2Q19.

The analyst said inclusion to the popular index could impact the share price. "We examined the 12 stocks added to the S&P 500 in the last 6 months," he commented. "While performance was uneven across the group, those not previously in the S&P 400 prior to inclusion in the S&P 500 saw an average share price increase of 6.9% (versus S&P 500 up 0.2% on average) on the day of announcement. We note that TSLA is not in the S&P 1500"

"While TSLA still has to prove it can sustain profitability, we believe the company will achieve this last eligibility requirement driven by steady demand for Model S & X, increasing production to meet Model 3 demand, and potential for meaningful ZEV credit revenue," he adds.

The analyst reiterated an Outperform rating and price target of $430.

For an analyst ratings summary and ratings history on Tesla click here. For more ratings news on Tesla click here.

Shares of Tesla closed at $348.16 yesterday.

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