Tesla stock branded ‘buy’ amid confusion over automaker’s plant

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Shares of Tesla Inc. received a few upgrades this week as confusion reigned over the extent to which the company’s California plant had been affected by a coronavirus-related shutdown.

Bank of America analysts have moved Tesla TSLA,
-0.98%
shares up a notch equivalent to holding as Tesla shares fell about 50% during the coronavirus-related stock market carnage. About a month ago, Tesla shares tested $ 900; they were recently trading under $ 400.

The upgrade is based “only on valuation,” analysts said, also raising their target for the share price from $ 370 to $ 500. “While we continue to view (Tesla) as a pioneer in the electric vehicle (EV) market, we believe investor optimism for the company and its business / financial future remains overblown.”

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Tesla’s volume growth “is real, but driven by expanding capacity and committing capital,” the electric vehicle market is not unlimited, and probably smaller than people thought, and its profitability and cash flow “are not good or consistent and constitute major risks”. Analysts said, listing the risks associated with the stock.

CFRA analyst Garrett Nelson has upgraded Tesla shares to no longer sell this week, also based on the precipitous fall in stocks alongside US stocks.

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“With (Tesla) stocks down more than 50% since hitting an all-time high last month and having hit our price target, we now see (Tesla’s) risk / reward profile as much more balanced. and we are raising our opinion to hold, “he said. The new Model Y compact SUV is likely to sell “very well” and the timing of Tesla’s $ 2.3 billion capital increase was a “cautious move that helped boost liquidity.”

Tesla announced its first Model Y delivery earlier this week and announced plans to continue operating its Fremont, California plant.

Late Tuesday, the Alameda County Sheriff’s Department tweeted that the Tesla plant in Fremont, Calif., Was a non-essential business and could only maintain “minimal base operations” in the midst of a regional shelter-in-place order to slow the spread of the new coronavirus.

It was not clear whether that meant the plant would shut down, in part or in whole, and Tesla did not respond to multiple requests for comment. Several counties in the San Francisco Bay Area are subject to a shelter-in-place order that went into effect on Tuesday.

Tesla workers reportedly reported for work at the Tesla factory, although CEO Elon Musk said in an internal email that it was “totally okay” to stay home, the San Jose Mercury News reported. , adding that Musk had told employees he would continue to come to work. everyday.

The plant employs around 10,000 people. Musk played down the risk of coronavirus in tweets, saying on Monday that the “danger of panic still far exceeds the danger” of COVID-19 and earlier this month, calling the “panic” over the virus “stupid “. Tesla has not informed investors of its plans for the coronavirus disruption.

On Tuesday, the United Auto Workers and the Detroit automakers struck deals to avoid shutdowns of U.S. factories for weeks. Tesla does not have a unionized workforce.

The union said Tuesday evening that company executives had agreed to partial plant closures to allow for cleaning between shifts and other measures to minimize potential transmission of the virus.

Now read Jeff Reeves:Here’s what it will take for Tesla’s shares to recover from the sale of the coronavirus

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