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Tesla, Nio shares get price-target hikes

Tesla Inc. stock and American depositary shares of Nio Inc. got price-target increases on Monday, with Wall Street emphasizing the electric-car makers’ tech-company side.

B. of A. analysts raised their price target on Tesla
TSLA,
-5.16%

stock to $900, from $500, praising Tesla’s fourth-quarter sales as “solid” and saying that the company’s $5 billion stock offering in December reinforces their view that it “will utilize its stock to raise low-cost equity capital to fund accelerated growth.”

“(Tesla) stock is driven by growth afforded by valuation,” the analysts, led by John Murphy, said in a note.

“The higher the upward spiral of (Tesla’s) stock goes, the cheaper capital becomes to fund growth, which is then rewarded by investors with a higher stock price. The inverse of this dynamic is also true, and it is this self-fulfilling framework that appears to explain the extreme moves in (Tesla) stock to the upside and downside,” the analysts said.

Tesla shares took a breather on Monday following an unprecedented 11-day winning run in previous days. The stock is up 776% in the past 12 months, compared with gains around 17% for the S&P 500 index
SPX,
-0.21%

in the same period.

Nio ADRs rallied on Monday, trading as high as $66.89 earlier and up nearly 9% at last check. A close higher would be a second straight record high for Nio.

The company held a “Nio Day” on Saturday, unveiling a new luxury sedan, the ET7, and showcasing its technological advances. The ET7 and its autonomous driving capabilities will feature Nvidia Corp.’s
NVDA,
+5.05%

“orin” chip, in a partnership also announced Saturday.

The “Nio Day” reveals led analysts at JPMorgan to increase their price target on the ADRs to $75, from $50, and “sustain our view that Nio will continue to trade more like a fast-growth technology/EV stock than a carmaker,” the analysts said. They kept their rating on Nio’s ADRs at their equivalent of buy.

Nio’s ADRs have gained more than 1,700% in the past 12 months.

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