Tesla (NASDAQ:TSLA) is a polarizing name and regularly elicits strong opinions. Some are firmly planted in the bull camp while others are staunch bears. But can you be both at the same time?
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Yes, according to Baird analyst Ben Kallo. That is, the analyst is bullish on Tesla’s long-term prospects but thinks the near-term landscape will be more difficult to navigate. As such, Kallo has made Tesla a ‘Bearish Fresh Pick.’
That accolade has been granted following the recent news that a Delaware judge said CEO Elon Musk’s $56 billion Tesla pay package is too much to stomach. The ruling came in response to a shareholder lawsuit regarding the pay package set by the board in 2018. The judge’s conclusion was that Tesla and Musk were unable to demonstrate the fairness of the compensation package, indicating the company will need to devise a new compensation plan for Musk.
Kallo expects Musk to appeal against the decision, but in the meantime, it spells bad news for the stock. “We believe this will create a negative overhang on the stock until additional clarity is given,” the analyst said.
That is not the only problem, however. Given the ongoing war between Israel and the terrorist organization Hamas, along with subsequent attacks on ships in the Red Sea, Q1’s delivery numbers are at risk. A recent two-week production shutdown at Giga Berlin resulted from disruptions to Red Sea shipping routes. This is likely to lead to a sequential decline in deliveries, jeopardizing the Street’s forecast of approximately 494,000 deliveries in Q1 compared to 4Q23’s approximately 484,500.
Nevertheless, the current problems haven’t dampened Kallo’s general enthusiasm. “Despite these challenges which we view as near term, we continue to view TSLA as a core holding and one of our favorite names in the longer-term,” he summed up.
Bottom-line, Kallo maintained an Outperform (i.e., Buy) rating on the shares, backed by a $300 price target. The implication for investors? Upside of 60% from current levels. (To watch Kallo’s track record, click here)
Elsewhere on the Street, the stock claims an additional 11 Buys, 16 Holds and 6 Sells, for a Hold consensus rating. However, going by the $220.98 average price target, a year from now, shares will be changing hands for ~18% premium. (See Tesla stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
