Tesla (NASDAQ: TSLA) bear Needham & Co. has changed its tone on the electric automaker, advising clients to “hold” from “underperform.” The firm cited several factors that indicate potential strength from Tesla stock, which is up 21.59 percent in the past year.
“We believe the stock is fairly priced, and we do not see a catalyst for underperformance in the near-term,” Vikram Bagri, who took over coverage on Tesla shares for the group from Raji Gill, said. “In fact, we see several potential catalysts that could drive the stock higher.”
Bagri went on to list the renewal of the federal tax credit, which Tesla has not been able to receive as it has sold 200,000 electric vehicles, as a major benefactor for Tesla. Additionally, S&P Global Ratings has outlined its stipulations for Tesla to improve its credit rating, which presently sits one notch below investment grade.
Tesla’s potential launch of the Cybertruck next year, its expansion of the Supercharger network, and gross margin improvement due to the 4680 battery cell were also listed as potential factors.
Tesla shares were up 1 percent at the time of writing, trading at $305.64. Tesla performed a stock split on August 25, which decreased the price by one-third and increased available shares by three times.
Long-term expectations and forecasting also played a part in Bagri’s decision to upgrade Tesla’s rating at Needham. Bagri believes Tesla will hold around 10 percent of the overall market share of passenger vehicles by the end of 2023. Additionally, he believes global electric vehicle adoption will sit around 40 percent by the end of next year.
Tesla lost its title as “most shorted stock” yesterday after Apple overtook the electric automaker’s short interest for the first time in over 800 days.
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Quotes provided by MarketWatch.