CFRA upgrades Tesla, but points to risks and valuation concerns

U.S. two-dollar billsPhoto by Leslie Shaffer

CFRA upgraded Tesla to Hold from Sell after the stock’s recent selloff to levels closer to its US$300 target.

Growing expectations that Tesla may miss Model 3 production targets again contributed to the drop in the “premium valued volatile shares,” analyst Efraim Levy said in the note dated Monday, U.S. time. He noted that the stock trades at 120 times CFRA’s 2019 earnings per share forecast of US$2.50 and 37.5 times its 2020 EPS estimate of US$8.00.

“While we see cash flow risks from further production delays potentially hurting the stock, we would expect the eventual resolution of production issues would be an upward catalyst for the shares,” he said. “Our enthusiasm is restricted by execution risks and valuation.”

The stock ended Monday up 0.88 percent at US$304.18.