As the auto industry transitions to electric vehicles, Tesla may no longer be the only winner.
Citi said trends in the auto industry were all pointing to a strong fourth quarter, prompting analyst Itay Michaeli to raise his target stock prices for Tesla, Ford and General Motors.
In a research note, Mikkeli wrote: "We have raised our automotive industry earnings per share forecast for 2021-2023 to reflect strong trends in the fourth quarter, particularly in the US market. ”
Mikkeli raised tesla's (TSLA) price target from $236 to $262. The analyst noted that supply and demand conditions are improving, and despite recent headwinds in profit margins, the supply of electric vehicles will remain strong enough to drive year-over-year profit margins.
Mikkeli, one of eight analysts surveyed by FactSet, rated Tesla "Sell" with a price target significantly lower than Wall Street's average consensus value of $861.41. The analyst's sell rating reflects Citi's belief that Tesla's current valuation is high risk.
Mikkeli added: "If we look at several other companies that are close to Tesla's current market capitalization, we will find that their total profits (on average) are 8 times higher than Tesla's current market expectations for 2021 and 3 times higher than Tesla's market expectations for 2025." ”
Tesla shares fell after news of the recall of hundreds of thousands of Model 3 and Model S cars. On Thursday, Tesla shares fell 1.46 percent to $170.34.
Mikkeli is more bullish on General Motors (GM), maintaining a buy rating and raising its share target from $90 to $96. He believes GM will benefit from the new launch of ICE trucks and electric vehicles, as well as a positive supply-demand cycle.
GM holds a controlling stake in Cruise, a leader in autonomous driving, worth about $17 billion. Cruise plans to roll out self-driving taxis in the coming years. GM said Cruise will bring $50 billion in revenue to the company by 2030.
Mikkeli wrote: "Although the company's stock price has been underperforming since the departure of the CEO of its self-driving car subsidiary Cruise, GM is still our first choice." ”
GM was also named one of the top stocks for 2022 by Barron's.
Mikkeli also raised the price target for Ford (F) from $20 to $23 to reflect the strong trend in the auto industry in the fourth quarter and demand from the U.S. market. He added that Ford's decisions on electric vehicles will continue to benefit the company. The analyst reiterated the neutral rating of the stock.
"We continue to believe that GM has more upside relative to the upside, but we are taking a constructive stance towards Ford as its long-term risk/reward profile continues to improve," Mikkeli said.
Shares of General Motors rose 1.57 percent to $58.13 on Thursday, while Shares for Ford fell 0.44 percent to $20.47.
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Original barronschina articles, not reproduced without permission. For the December 30, 2021 report, "Tesla, GM, and Ford Price Targets Raised by Citi. General Motors Is the Top Pick.”。 (The content of this article is for reference only, investment advice does not represent the tendency of Barron's; the market is risky and investment should be cautious.) ）
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