S&P’s has started to cover in its ratings Tesla Motors Inc, initiating the review with a “sell” rating, as it wants to caution investors over the electric carmaker’s rising stock price.
S&P has put in place a 12-month target share price for Tesla of just $150. The stock was actually slightly down 0.3% at $183.42 in the afternoon trading on Wednesday on the New York Stock Exchange, following the announcement. Also on Wednesday, Barclays analyst Brian Johnson commented in a research note that Tesla’s third-quarter sales are expected to overcome the company’s internal prediction, but he decided to keep his forecast of $141 a share as being the company’s “fair value.”
“We are positive on Tesla’s fundamental growth story, but are concerned by its valuation,” S&P analyst Efraim Levy said in a research note. “We believe there is execution risk for Tesla as well as opportunity. We expect these volatile shares to be impacted by news flow and investor sentiment shifts,” he added.
On Tuesday, Wedbush Securities analyst Craig Irwin decided to increase his rating on Tesla to “outperform”, up from “neutral” and grew his targeted share price to $240 from $180. He quoted as reasons a proprietary survey that augments higher expectations for the company’s next generation of smaller, more affordable electric cars, dubbed the Gen III.