In a report released today, Gordon Johnson from GLJ Research maintained a Sell rating on Tesla, with a price target of $19.05.
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Gordon Johnson has given his Sell rating due to a combination of factors that highlight Tesla’s structural disadvantages compared to its peers. Unlike the ‘Magnificent 6’ companies, Tesla primarily sells hardware rather than software, which limits its pricing power and results in thinner incremental margins. Additionally, Tesla’s overall profitability and Return on Invested Capital (ROIC) lag behind its peers, which are not characteristics of a leading business but rather of a commodity manufacturer.
Even when considering optimistic projections for Tesla’s Full Self-Driving and humanoid robots, Johnson argues that these elements provide minimal benefit and may even detract from the company’s core issues. The stock’s high forward P/E ratio suggests unrealistic expectations, as it implies a need for Tesla to distribute its entire projected net income over an extended period, which Johnson finds indefensible given the company’s current financial outlook.
In another report released on August 12, Guggenheim also maintained a Sell rating on the stock with a $175.00 price target.
Based on the recent corporate insider activity of 52 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of TSLA in relation to earlier this year.