UPDATE: JPMorgan on Tesla (TSLA): 'we recommend investors not raise their holdings'

December 9, 2020 7:57 AM EST
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(Updated - December 9, 2020 8:41 AM EST)

JPMorgan analyst Ryan Brinkman raised the price target on Tesla (NASDAQ: TSLA) to $90.00 (from $80.00) while maintaining a Underweight rating.

The analyst comments "We have recently fielded a number of calls from long-only investors who are faced with or shortly will be faced with the decision of whether or not to buy Tesla shares as the stock is added on December 21 to the S&P 500 index, given that many funds’ performance is evaluated against this benchmark. Investors in the past have expressed to us that they do not understand why Tesla shares are rising as much as they are but as the stock became included in indices against which they are benchmarked (e.g., upon Nasdaq 100 inclusion in July 2017), they opted anyhow to take it to equal weight in their portfolio relative to their benchmark, so as to concentrate on generating alpha in other areas of the market in which they felt they have more of an edge. That has proven prudent and wise, but even as many investors are likely tempted to do the same upon S&P 500 inclusion amidst the shares’ continued meteoric rise, and even as we raise our price target modestly on the back of the firm’s $5 bn at-the-market offering announced yesterday (in part reflecting that we value cash at 100 cents on the dollar but TSLA shares at only a fraction), we recommend investors not raise their holdings in Tesla to approximate its weight in the benchmark."



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