Tesla switched to buying from UBS after a 31% price slide

Tesla was upgraded to buy from UBS on the belief that the stock market slide offers an attractive entry point for a high-growth company.

Analyst Patrick Hummel kept his price target at $1,100 while upgrading the stock. Tesla TSLA,
Shares closed at $725.60 on Wednesday, down 31% from a year earlier.

Hummel said the operational outlook is better than ever due to a record high order backlog and two new gigafactories coming online. He cut his 2022 earnings per share target by 12% to account for the lockdown in Shanghai.

He says Tesla’s vertical integration in semiconductors, software, and batteries will lead to superior growth and profitability later in the years to come. “Tesla can outperform competitors with a combination of internal cell capacity, its lead over global competitors in using LFP cells, and its high percentage of directly sourced battery raw materials, most notably lithium,” he said.

Tesla’s reported plan to cut 10% of its workforce hasn’t swayed Hummel. “For such a fast-growing company, there’s always a risk of putting too much emphasis on overhead functions, and we think the soft macro outlook is a good reason to accelerate efficiency efforts,” he said.

Tesla’s shares have suffered not only from the broader decline in tech stocks, but also from CEO Elon Musk’s push for Twitter TWTR.
using pledged Tesla stock to fund his bid. Musk is referred to as a key man risk.

“Elon Musk remains the key person at Tesla, with all the associated risks,” he notes wryly. “The promotions, social media posts, etc. are highly unpredictable.” Tesla switched to buying from UBS after a 31% price slide

Brian Lowry

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