RBC Capital Markets analyst Joseph Spak ended his bearish call on Tesla Inc. shares (TSLA) Thursday with an upgrade to sector perform from underperform. Tesla shares are up 2.9% in premarket trading Thursday. "There is no graceful way to put this other than to say we got TSLA's stock completely wrong (even if our fundamental view to date wasn't too far off)," he wrote in a note to clients. "Our biggest miss was how TSLA can take advantage of its stock price to raise capital inexpensively and fund capacity outlays and growth." He said that this dynamic enables Tesla to easily fund its future growth while traditional carmakers will need to rely on considerable cash from their current operations in order to fund their electric-vehicle ambitions. "In short, the higher stock price is somewhat self-fulfilling to TSLA's growth potential," he wrote. Further, Tesla's stock is "the ultimate sentiment pendulum," according to Spak, and the company serves as the "poster child" for electric vehicles at a time when momentum for the category is budding in many regions. Ultimately, Spak set a sector perform rating on the stock because he said that its "current valuation assumes high growth assumptions and strong execution." He raised his price target to $700 from $339 in his note to clients. Tesla shares have gained 78% over the past three months as the S&P 500 has added about 10%.
-Emily Bary; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 07, 2021 07:58 ET (12:58 GMT)
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