Canaccord Genuity Upgrades Tesla (TSLA) to Buy; EV Penetration Story 'Underappreciated'

(Updated - February 11, 2019 7:19 AM EST)

(updated to expand analyst comments)

Canaccord Genuity analyst Jed Dorsheimer upgraded Tesla (NASDAQ: TSLA) from Hold to Buy with a price target of $450.00 (from $330.00). The upgrade was in conjunction with their white paper "Electrifying autos and super-charging mobility" published today. Dorsheimer views the EV penetration story as underappreciated by the Street.

Dorsheimer said the last two quarters and recent guidance for Q1 have removed significant concerns for both production capability and profitability of the critical Model 3. As such, they see a more stable 2019 with far fewer concerns for investors in the company.

The analyst sees the recent string of price cuts as further proof that the cost cutting and right sizing that the company has undertaken are resulting in concrete movement towards the ultimate goal of an affordable $35,000 Model 3.

Further, with strong shipments into EU and China, they expect that the initial "tiny profit" Q1 expectation that the company announced in early January will prove to be the low point in EPS for the year and expect that the ramp towards year end may quell the short thesis.

Meanwhile, their prior concerns around corporate governance were allayed with the addition of Larry Ellison and Ms. Wilson-Thompson as independent directors, and they believe Elon Musk is demonstrating a calmer demeanor characteristic of strong leaders.

In addition, they view Tesla's coveted autopilot technology as having an almost insurmountable lead in autonomous driving, which will eventually be the key component of future transportation.

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 $305.83 yesterday.

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