Tesla TSLA Shares Remain a Buy & Recall Is Old News, Per Goldman Sachs Analyst

In a note to investors, Goldman Sachs analyst Mark Delaney reiterated a Buy recommendation and a price target of $780 for Tesla (NASDAQ: TSLA) following positive news that the Model Y received a 5-star overall safety rating from NHTSA on January 13. He also wrote that 158,000 Model S/X recall is old news, and Tesla has come up with a solution.

In December 2020, Delaney upgraded Tesla to Buy from Neutral, raising its 12-month target price to $780 from $455, considering that the move to EV adoption is happening faster than previously thought, while Tesla will maintain its market leadership. Now he has reaffirmed his forecast for the price and action regarding Tesla shares.

Yesterday in the media there was news that the US National Highway Traffic Safety Administration asked Tesla to recall 158,000 Model S and Model X vehicles over media control unit failures. Nevertheless, the news outlets decided not to disclose the fact that this news is old, and Tesla has already proposed a solution to the voiced problem, which further emphasizes the targeted information attack on the California-based manufacturer.

In the note, Delaney emphasized that this news is out of date, and Tesla had already offered an extended warranty and switched to a new product in 2018 that doesn’t have the same issue. He wrote that the financial implications of this will depend on several factors, however this does not affect his forecast for the company’s stock.

"The fact that NHTSA has been investigating this has been previously discussed in media reports in June 2020 and stated to be a problem with the eMMC memory. Tesla had already been offering an extended warranty, and switched to a new product in 2018 that doesn't have the same issue. The financial impact will depend on the price of repairs and final number of units that are fixed, and if there is any change to Tesla's warranty accrual."

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Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.