JPMorgan Chase (Morgan Stanley) analyst Ryan Brinkman raised his price target from $80 to $90 on Wednesday (9), but still maintained a “sell” rating, and warned that Tesla shares have been “dramatically overvalued” (Dramatically Overvalued), should not be bought before its inclusion in the S&P.
Brinkman on Wednesday (9) Tesla target price from $ 80 last week 12.5%, to $ 90 per share, but still maintain the stock rating “sell” (Sell) unchanged, which is one of the lowest target price on Wall Street, 86% lower than the current trading price of Tesla.
Still, Brinkman is concerned about Tesla’s high valuation and said the price target was raised because the company is selling $5 billion in stock, and overall, he remains bullish on Tesla.
Brinkman noted that Tesla stock has risen more than 800% since December 2018, while consensus expectations for Tesla’s profits have slipped. The analyst had expected Tesla’s EPS to be about $4 in 2021, and his financial model now suggests that Tesla’s EPS will be $3.80 this year.
He also warned clients not to adjust the Tesla portion of their portfolios with the weight of the S&P 500.
Tesla will be included in the S&P 500 on a one-time basis before the market opens on December 21, based on the market capitalization weighting of the number of shares outstanding, with Tesla’s weighting in the S&P 500 at about 1% at the time of the announcement and moving higher as market capitalization has increased recently.
Once included in the S&P 500, Tesla’s stock price will automatically be included in the portfolios of index-tracking funds, and other funds that benchmark against the S&P 500 will follow suit, making Tesla’s stock price a major factor in the performance of those funds.
We recommend that investors do not weight Tesla’s holdings in their portfolios by the S&P 500 in equal proportions, as we believe that each of the conventional metrics not only overvalues Tesla stock, but exaggerates it,” said Brinkman.
Tesla’s excellent recent performance has set off positive and negative sentiment on Wall Street, with price targets ranging from $40 to $780 and a bull/bear spread of more than double the current stock price at $740, compared to about 40% for Dow Jones components.
Brinkman has maintained a “sell” rating on Tesla stock for nearly five years, and Tesla’s stock, which traded at just $40 in 2015, has soared 1,500% in those five years.
Recent Comments