By Noel Randewich
SAN FRANCISCO (Reuters) – Shares of Tesla
With Tesla still up about 25% since the company posted its second consecutive quarterly profit a week ago, Canaccord Genuity cut its rating on Tesla to “hold” from “buy,” further shrinking the already small number of analysts who recommend buying the stock.
Tesla Vice President Tao Lin said on the Weibo social media platform that car deliveries from its new Shanghai plant would be temporarily delayed and that the company planned to restart production on Feb 10.
The $2 billion factory is a key part of Chief Executive Elon Musk’s plan to make more than half a million automobiles this year.
Tesla last week said it expected a delay of up to a week and a half in the ramp-up of Model 3 production at the plant after the government ordered it to shut the factory due to the outbreak.
The coronavirus has disrupted business across China, with the government there saying another 65 people had died as of Tuesday, the highest daily total yet.
“Given the 3,000 per week China Model 3 production expectations in a country that remains on lockdown, we feel a reset of expectations in Q1 is likely and thus needs to be reflected in the valuation,” Canaccord analyst Jed Dorsheimer wrote in a report, leaving his price target unchanged at $750 per share.
The stock was last down 19% at about $720.
Tesla’s rally of over 300% since early June has been a vindication for Musk, who has transformed a niche car maker with production problems into the global leader in electric vehicles, with U.S. and Chinese factories.
Still, many investors remain skeptical that Tesla can consistently deliver profit, cash flow and growth in the face of competition from established rivals including BMW
Barclays analyst Brian Johnson maintained his “underweight” rating on Tesla while raising his price target to $300 from $200.
“We continue to believe TSLA is fundamentally overvalued – but nevertheless concede that the recent price action opens up the possibility of raising capital cheaply, and hence reduces that chance of a stalled business,” Johnson wrote in a client note.
Needham analyst Rajvindra Gill, who also recommends selling Tesla, warned in a report that Tesla stock is trading at price-to-earnings multiples several times higher than leading technology companies.
“We’ve never seen a stock rise that much that fast with such little regard to past fundamentals or track record,” Gill wrote.
Following Canaccord’s downgrade, nine analysts recommend buying Tesla’s stock, while 11 analysts are neutral and 15 analysts recommend selling, according to Refinitiv.
The median price target of analysts is $390.
(Reporting by Noel Randewich; Editing by Nick Zieminski)