The Ratings Game: Tesla has one less bear after Needham upgrades, citing several reasons to expect a stock rally

by | Sep 15, 2022 | Stock Market

Shares of Tesla Inc. gained Thursday, after Needham backed away from its bearish view on the electric vehicle giant, saying there are now several potential catalysts that could boost the price, and none that might knock it down near term. Needham said it transferred analyst coverage of Tesla, from Raji Gill to Vikram Bagri, and Bagri subsequently raised the rating to hold from underperform.

“We believe the stock is fairly priced, and we do not see a catalyst for underperformance in the near-term,” Bagri wrote in a note to clients, with “Catch me if you can” in the title. “In fact, we see several potential catalysts that could drive the stock higher.” Tesla’s stock
climbed 1.0% in afternoon trading toward a one-month high. It has run up 13.1% amid an eight-day stretch in which in has gained seven days. Here are Bagri’s potential positive stock catalysts:
Renewal of federal tax credit eligibility, under the Inflation Reduction Act, which offers tax rebates for buying new and used electric vehicles.

A potential upgrade of Tesla’s credit rating to investment grade status by the end of the year. S&P Global Ratings currently rates Tesla credit at BB+, which is the highest speculative grade, or “junk” rating, and just one notch below investment grade.

The first deliveries of the Cybertruck in 2023.

Expansion of the EV charging network and improved utilization.

Gross margin improvement, driven by 4680 cells.

Bagri said he believes Tesla could achieve about 10% global market share of passenger vehicles, as global battery electric vehicle (BEV) adoption is expected to reach 40% by the end of 2023. His market share estimate assumes the company can maintain a market s …

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