Tesla Stock Gets an Upgrade: The Week's 5 Biggest Analyst Calls
Garrett Cook | Feb 05, 2023 07:19AM ET
Here are some of the biggest analyst headlines that InvestingPro subscribers got in real time this past week - including an upgrade for Tesla. Sign up for rapid-fire, comprehensive coverage of market-moving analyst calls.h2 Tesla stamped with Buy/h2
The week began innocently enough, with a vanilla upgrade on Tesla (NASDAQ:TSLA) out of reputable research firm Berenberg.
The firm raised Tesla to Buy while cutting their expected value of the equity to $200 per share, which comes out to a 19x price-to-earnings (P/E) ratio on 2025 earnings per share (EPS) estimates, per the research note. As a reminder, Warren Buffett's teacher Ben Graham was an advocate of under 12 P/E being the time to get invested in a business (as opposed to trading its equity on a research firm's recommendations).
Tesla is in trouble. Elon Musk seems way over-extended to manage that kind of bandwidth requirement without extreme wear on his mind (his hardware, if you will), but I digress.
Shares of Tesla slid Monday prior to rebounding upward all week to end 6.7% higher, or at $189.98 as of Friday's regular session close.
(And a quick side note, since I mentioned Buffett and given that we are in a buying environment overall: Warren prefers to value a company without knowing its price so he is able to determine if the business is overvalued or undervalued. I'm just saying, he's not scalping headlines.)
h2 Cushman & Wakefield cut to Peer Perform/h2On Tuesday Wolfe Research, which is respected across managers and traders for their precision analysis, downgraded Cushman & Wakefield (NYSE:CWK) to Peer Perform.
The firm pointed out many reasons to expect a lower valuation, however they specifically commented, "We believe the market will also focus on the composition of earnings."
As with an OnlyFans model, if you have just one single source of earnings power, that is an extreme investment risk. Once that avenue closes up for a company, what will be done to maintain outside investment appeal?
Maybe one ought not to manipulate arcane financial metrics used to prevent investors from working too hard to value a company? That is what Wolfe is wondering with CWK, evidenced by the supporting comment, "...We believe the stock may need unadjusted financial metrics (such as GAAP net income and operating cash flow) to improve."
h2 Goldman assigns new analyst - and lower rating - to Hasbro/h2On Wednesday, Goldman Sachs assigned a new analyst to American toy makers, and I want to highlight the "downgrade" on Hasbro (NASDAQ:HAS) - because while Goldman as the bank is upgrading Hasbro, the analyst is new. The analyst has a new world view, new stress metrics, and so on, so it is not what I would call a real downgrade.
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The reality of the company's story has not changed. Goldman merely forced a new marriage between all of these companies - and a new analyst - which resulted in, obviously, a new outlook on the future reality of Hasbro. Much like a new relationship partner values the person differently from the prior partner.
The result of this was enjoyable to watch cycle across the hidden channels out here (Discord, Trillian, emails, Slack, Skype, WhatsApp, private chat rooms) as desperate scalp traders sent alerts to all the desks at the same time to "scalp" the speculative-trading upticks as the headlines hit.
This is extremely common practice and I do not participate in it. To the contrary, I fight it tooth and nail to set a new standard among event-driven information distributors through confirmation and clarity in a headline update at InvestingPro.
Trading isn't about execution on an asset based on technicals, it's about trading the equity on the privately traded intel being delayed to an increasingly larger audience over an increasingly tight period of time.
Hasbro ended the week up 5%, closing Friday's regular session at $61.73.
h2 FedEx upped to Buy/h2On Thursday Citi upgraded FedEx (NYSE:FDX) to Buy in a great call on the transporter.
The investment bank noted management is taking action to make a material impact on costs as Wall Street analysts have lowered their estimates on FY 2023 and FY 2024 EPS by a substantial 30%-40%.
This specific commentary offered a great disconnect in the valuation which is at 12.6 P/E on 2024 estimates (recall my Buffett comment above).
BofA also upgraded the stock to Buy that same day.
The equity was strong all week and surged to Friday's close of $214.67 from just under $190 on Monday, to end the week up 14%.
Friday was rather uneventful when it came to analyst research volatility opportunities.
h2 International Paper bumped up to Neutral/h2UBS upgraded International Paper (NYSE:IP) to Neutral.
It was not an exciting call.
The speed at which the headline was issued on InvestingPro first, before anyone, resulted in a high bidder surge. This annoyed some scalpers who couldn't get filled before the information was released premarket.
UBS said increasing confidence on market demand for paper, specifically during a demand trough, is enough to not be negative on the company.
IP shares closed Friday's session down 0.41% to $41.36. Earlier session highs off the open reached $41.80.
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For real-time headlines on analyst upgrades, downgrades, price-target changes and comments, check out InvestingPro
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