UBS Analyst Is Skeptical Of Tesla Value Surge
Patrick Hummel, an analyst at UBS, increased the price target from $160 to $410. However, Hummel believes that increased value of Tesla’s stock is overvaluing the positive performance seen by Tesla.
Tesla recently resumed profitability in the last quarter and investors are more optimistic about the company due to its success in establishing an auto-factory in China with plans to establish another one outside of Berlin. Hummel believes that there is no margin for error if Tesla is expected to keep up this positive performance.
"This is a stretch because it requires perfect execution, strong EV demand growth and at the same time failure of the incumbent OEMs to launch competitive EVs," Hummel wrote.
Trade regulations are always in flux and any change in investor sentiment could send the value of Tesla’s stock back down.
"Any delay, adverse regulation change or ramp up issue would likely trigger a sharp negative share price reaction." Hummel wrote.
This recent increase in value and confidence from investors will be further tested with the upcoming release of Tesla’s fourth quarter performance.