Credit Suisse Upgrades Tesla (TSLA) to Neutral; Better Positioned on COVID-19

Credit Suisse analyst Dan Levy upgraded Tesla (NASDAQ: TSLA) from to Neutral with a price target of $580.00 (from $415.00), saying COVID-19 disruption makes Tesla competitively better positioned in a ‘Two Clocks’ world.

"It competitively has more edge in the transition to EV as coronavirus disruption will make it more difficult for legacy automakers to balance the long-term shift to EV in the face of near-term cycle disruption," Levy commented.

While more positive long-term, the analyst admits near-term Tesla may face risks. Demand is expected to soften in 2Q, and Tesla could see supply shortages if the shutdown lasts until June, he said. They estimate the Fremont shutdown driving ~$300mn+/wk of cash burn. They cut their 2020 deliveries forecast to ~400k vs prior ~550k.

The analyst adds, We are more positive on Tesla. Yet our valuation framework reminds us that in our revised $580 TP we are already giving Tesla credit in a variety of ways – volume growth to 1.2mn units by 2025 (making it the clear #4 global luxury brand behind the German brands), solid margin expansion, a 2025 PE multiple of 18x (far more than other auto co’s), and upside optionality via “Bull” and “Uberbull” cases. For upside, one must believe in additional volume, margin, or multiple."

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 $650.95 yesterday.

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