Tesla (TSLA) stock soared 8% on Monday on the heels of an upgrade from analysts at Credit Suisse.
Shares of the electric vehicle giant are at an attractive entry point and “checks all the boxes,” wrote Dan Levy and Trevor Young in a note to investors.
The analysts upgraded the stock to Outperform from Neutral with a 12-month price target of $1,025.
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“Tesla is a 1 of 1: we are hard pressed to find a stock that checks all the boxes as Tesla does – attractive growth story (both top-line and EPS), disruption, decarbonization, etc,” wrote Levy. “Accordingly, with robust fundamentals ahead and with the stock having been caught in the market decline, we believe the stock should recover.”
“We are in the midst of EV inflection, and Tesla is at the heart of it: Tesla remains the leader of the multi-decade secular transition to EVs,” wrote Levy.
“With less question around demand and much more question around supply of EVs, Tesla should be a key beneficiary — it has a product lead vs. others, and has taken the most holistic approach on EV supply,” added the analyst.
He also argues Tesla is the frontrunner when comparing it to legacy automakers pivoting into the electric vehicle industry.
“In the race to an EV world, Tesla remains in the lead: We believe legacy OEMs are taking clear steps to transitioning to an EV world, yet we expect Tesla to maintain a lead for the foreseeable future,” said Levy.
The analyst goes on to highlight how the EV maker has surprised to the upside on margins, in large part driven by cost reductions. Levy believes the strong margins are sustainable.
Tesla shares were volatile last week despite a blowout fourth quarter. Investors may have been spooked by the company’s warning of supply-chain issues.
“Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022,” Tesla said in a shareholder deck.
Share of other electric vehicle makers are moving in tandem with Tesla. On Monday, EV startups Rivian (RIVN) and Lucid (LCID) soared higher. For the month of January though, these stocks are underwater as investors have pulled out of growth names amid high inflation and the likelihood of tighter monetary policy.
Ines is a markets reporter covering stocks from the Nasdaq. Follow her on Twitter at @ines_ferre
Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre