The race for the best electric vehicle is only just taking off, but with competitors like Tesla Inc. (NASDAQ: TSLA) and General Motors Co. (NYSE: GM), it is making for an exciting race. GM’s Chevy Blazer threatens to be a Tesla killer, but there’s some time until it will be released. While investors are waiting, one investment firm thinks it has a definitive winner picked in this race.
Deutsche Bank has issued a couple calls with a focus on electric vehicle firms, namely Tesla and General Motors. Emmanuel Rosner was the lead analyst on the calls for the brokerage house. While each of these calls is fairly positive, there is one clear winner between these two stocks.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Deutsche Bank placed a “Catalyst Call: Buy” on shares of Tesla as a short-term investment idea ahead of the company’s second-quarter results on July 20. Tesla could report potential upside to “low” Wall Street expectations for margins, driven by good cost execution and continued pricing strength. Rosner expects management to reiterate its full-year deliveries growth of 50%, suggesting total volume of approximately 1.4 million units and implying “considerable volume ramp” in the second half of the year.
Wall Street’s anticipated sequential profit deterioration of greater than $1.5 billion “more than captures the large headwinds faced in the quarter,” from COVID-19-related shutdowns in China, costs associated with closed-loop productions and ramps in Texas and Berlin factories. Rosner continues to think that Tesla’s 30% year-to-date pullback largely reflects supply issues “that are fast improving.” The sell-off provides a “compelling opportunity to accumulate the stock” into the second half and 202,3 when Tesla’s volume growth and margin expansion “could be meaningful,” according to Rosner.
As a result, Deutsche Bank reiterated a Buy rating on the stock with a $1,125 price target, which implies upside of 56% from the most recent closing price of $720.20.
The stock traded at around $746 on Wednesday, in a 52-week range of $620.57 to $1,243.49. Shares are down over 32% year to date.
Deutsche Bank lowered its Buy rating on GM to Hold and cut the price target from $57 to $36, implying upside of 9% from the most recent closing price of $32.87. Rosner believes weakening in consumer demand for vehicles could lead to pricing pressure and affect GM’s profitability.
GM stock has a 52-week trading range of $30.33 to $67.21, and it traded near $35 a share on Wednesday. The stock is down 44% year to date.
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