On Oct 3, Zacks Investment Research downgraded
Tesla Motors, Inc.
) to a Zacks Rank #2 (Buy).
Why the Downgrade?
Tesla has witnessed sharp decline in share prices since a video
showed its Model S catching fire near Seattle, WA on Oct 2.
Tesla's shares dropped 4.2% to $173.31 yesterday and it declined
6.2% to $180.95 the day before, as the news sparked investors'
concern about the company's sales getting a hit. Investors were
worried that Model S sales may decline if the fire resulted from
any defect in the company's battery packs. The company's share
price was also affected by a downgrade in Tesla's recommendation
to Neutral from Outperform by R.W. Baird.
However, we remain optimistic about Tesla based on its expansion
in Europe and China together with better performance in the
second quarter of 2013. The company started taking bookings of
Model S recently. While Model S caters primarily to the affluent
class in China, it is also expected to be popular among the
environmentally conscious consumers.
Tesla is also expanding in Europe with a new assembly plant. The
company inaugurated its 18,900-square meters Tilburg Assembly
Plant in Netherlands for Model S. The plant will be the final
assembly and distribution center for all Model S cars to be
marketed in Europe.
The plant will also serve as the European service and parts
headquarters of Tesla. The automaker selected this location
because of its good connectivity with all important markets in
Europe via rail and motorway network.
FORD MOTOR CO (F): Free Stock Analysis Report
GENERAL MOTORS (GM): Free Stock Analysis
NISSAN ADR (NSANY): Get Free Report
TESLA MOTORS (TSLA): Free Stock Analysis
To read this article on Zacks.com click here.
The Palo Alto, CA-based automaker logged a loss of $30.5 million
or 26 cents per share in the second quarter of 2013 lower than a
loss of $105.6 million or $1.00 per share recorded in the
Barring one-time items other than stock-based compensation
expense, Tesla's earnings were 5 cents per share in the quarter
compared with the prior-year loss of $1.00 a share. That compares
favorably with the Zacks Consensus Estimate of a loss of 36 cents
Revenues jumped manifold year over year to $405.1 million in the
quarter from $26.7 million a year ago, beating the Zacks
Consensus Estimate of $395 million.
Over the last 60 days, the Zacks Consensus Estimate for 2013
increased significantly to earnings of 21 cents per share from
prior estimate of a loss of 68 cents. For 2014, the Zacks
Consensus Estimate improved 214% to $1.57 per share over the last
Other Stocks to Consider
Other major automobile stocks worth considering are
Nissan Motor Co.
General Motors Co.
Ford Motor Co.
). Nissan carries a Zacks Rank #1 (Strong Buy), while the other
two stocks carry a Zacks Rank #2 (Strong Buy).