Wall Street's biggest Tesla bear boosts his price target after 3rd-quarter deliveries, but still says the stock is a 'sell'
- Better-than-expected third-quarter deliveries for Tesla weren't enough to convince JPMorgan to upgrade its rating from the equivalent of "sell" — although the firm did boost its price target.
- JPMorgan reiterated its underweight recommendation for the electric vehicle company, but raised its price target from $65 to $75, representing potential downside of 82% from Friday's close.
- The firm pointed to Tesla's valuation as a sticking point, and advised a bearish view on the company.
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Tesla's better-than-expected third-quarter deliveries weren't enough to change the bearish view of JPMorgan, which reiterated its "underweight" rating on the stock, according to a note published on Monday.
JPMorgan did raise its price target on Tesla from $65 to $75, representing potential downside of 82% from Friday's close. The stock climbed 2.2%, to $424.22, at 11:13 a.m. ET.
The firm's price-target increase was based on strong third-quarter delivery figures and the addition of 2022 estimates to its valuation model.
Tesla delivered 139,300 vehicles in the third quarter, which was well ahead of both JPMorgan's 131,000 estimate and consensus estimates of 135,906.
JPMorgan estimated that Tesla's third-quarter delivery beat was primarily driven by China, "which could carry negative mix implications," the note said.
JPMorgan expects Tesla to register $200 million in regulatory credit sales in the quarter, helping drive an estimated third-quarter earnings-per-share of $0.58.
Still, despite an expected profitable third-quarter and better than expected deliveries, JPMorgan stayed bearish on Tesla "on what we see as lofty valuation coupled with high investor expectations and high execution risk," according to the note.