Tesla TSLA Upgraded, Price Target Boosted En Masse, After Stunning Q3 2020 Results

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Tesla (NASDAQ: TSLA) reported stellar Q3 2020 results, followed by a number of analysts raising their price targets. The company earned 76 cents in per-share earnings while Wall Street was looking for 55 cents. 

Cash

• $5.9B increase in Tesla's cash and cash equivalents in Q3 to $14.5B
• Operating cash flow less capex (free cash flow) of $1.4B in Q3

Profitability

• $809M GAAP operating income; 9.2% operating margin in Q3
• $331M GAAP net income; $874M non-GAAP net income (ex-SBC) in Q3
• SBC expense increased to $543M (driven by 2018 CEO award milestones)

Operations

• Record vehicle deliveries, profitability, and free cash flow
• Buildout of three new factories on three continents continues as planned
• First step of FSD beta rollout started in Oct. 2020

Piper Sandler analyst Alexander Potter says $ TSLA shares still deserve "must-own" status after the company posted "solid" execution in Q3. His target price for the stock is $515 and he has kept his Buy rating.

Baird analyst Ben Kallo upped his rating to Buy from Hold and increased his price target to $488 from $450. "We were too early," wrote Kallo in a Thursday research report. He believes Tesla's "competitive moat" over peers is growing and calls the stock a "must-own."

RBC Capital increased its price target on Tesla to $339 from $290 following the company's third-quarter earnings report, which "impressed on auto gross margins and [free cash flow] generation."

Tesla raised its 2021/22 capex guidance to the $4.5 billion to $6 billion range, an adjustment "necessary to deliver on growth expectations," according to RBC's note to clients, and which the carmaker should be able to fund operationally. "Historically, auto stocks don't fare well in rising capex cycles, but we believe bulls will embrace higher capex, specifically because it's needed to validate the growth/valuation and can be viewed as negative for other [original equipment manufacturers]," the brokerage added. RBC increased its 2021 delivery forecast to 766,000 units from 687,000 and adjusted its 2025 forecast to 1.3 million units.

JMP Securities analyst Joseph Osha upgraded Tesla shares to Buy from Hold. His new target price is $516; he didn't have one before the upgrade.

Morgan Stanley analyst Adam Jonas believes margins will remain strong in the fourth quarter. He rates Tesla shares Hold and has a $333 price target.

New Street Research analyst Pierre Ferragu believes the company can deliver 850,000 to 1 million cars in 2021. He rates shares Buy and has the Street-high price target of $578 a share.

Wedbush analyst Dan Ives has published a new "bull case" target price of $800 a share. He still rates shares Hold and has a $500 price target. Higher profit margins and improving electric-vehicle demand drove his higher bull case.

Canaccord Genuity raised price target to $419, Oppenheimer to $486 from $451, Goldman Sachs to $455 from $450, which underlines the overall positive sentiment of analysts.

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