Swiss Investment Firm UBS Group AG analyst Patrick Hummel is insisting Tesla (NASDAQ:TSLA) shareholders sell their current holdings. This advice comes shortly after Hummel more than doubled his price target for the electric car maker. Yet, despite the analyst’s rather bearish take, TSLA stock has held its gains, trading as high as $582.00 per share after the opening bell on Thursday.
UBS’s price target for Tesla stands at $410, a whopping 28% below its Wednesday closing price of $569.56. However, Hummel believes the positives that Tesla brings to the table are being “taken for granted,” even though the company’s price per share has more than doubled since October 1.
After Tesla shares fell just 1.2% in pre-market trading on Thursday due to a downgrade from Wall Street, the stock has nine buy ratings, eleven holds and seventeen sells. Bloomberg consensus believes the average price target for Tesla is around $370.
Tesla was recently recognized as the second most valuable automaker in the world, trailing behind only Japanese car manufacturer Toyota. Hummel does not seem to buy into Tesla’s long-term success as he notes risks in execution and the United States’ removal of some electric-car tax credits as reasons to unload the stock now. He believes these two factors will slow Tesla down substantially.
Hummel did not talk all bad about Tesla, as he did recognize that the company’s towering value is due to its long-term opportunities in autonomous vehicles. As Tesla’s technology continues to revolutionize the future of fully-autonomous driving, Hummel agrees that the company should hold a higher value than incumbent original equipment manufacturers.
Apart from UBS, Tesla also received a downgrade from Exane BNP Paribas. The firm adjusted its rating on the company, moving TSLA to “Neutral” from its previous “Outperform” rating.
On the contrary, Tesla’s target price from other financial firms continues to rise. Earlier this week, New Street Research’s Pierre Ferragu increased his price target to $800 after his initial target of $530 that was set in May 2018 was reached earlier this week.
Ferragu states Tesla’s dominance in the electric vehicle sector combined with the dependability the company offers to its customers was enough to increase the price target. Ferragu also believes the price of the stock could rise to as much as $960 by early 2021.
Tesla’s surge on Wall Street has been nothing short of spectacular. But when analysts and traders take into account the company’s strong Q3 numbers along with a massive 112,000 vehicle deliveries in Q4, it is understandable that the Tesla stock continues to rise in a quick fashion.
While the company continues to show a strong performance in the markets, Tesla stock has surged 22% in 2020 alone. Tesla’s Q4 2019 earnings call is scheduled for Wednesday, January 29. If CEO Elon Musk and other executives report another strong quarter, Tesla stockholders could be in for another big surge.
Disclosure: I have no ownership in shares of TSLA and have no plans to initiate any positions within 72 hours.