NEW YORK (TheStreet) -- Tesla (TSLA - Get Report) has been initiated with a "neutral" rating with a $230 price target, UBS said Wednesday. The firm said lowering battery and variable components costs are critical to long-term success.
"Disruption in autos will likely play out over decades rather than years given the high fixed costs," analysts wrote in a note. "We estimate TSLA is already pricing in 1m units within 10 years (which
would make TSLA the 4th largest luxury brand). As we see significant upside already
priced in & few near-term catalysts, we are initiating with a Neutral rating."
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- TSLA's very impressive revenue growth greatly exceeded the industry average of 3.8%. Since the same quarter one year prior, revenues leaped by 100.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.33, which illustrates the ability to avoid short-term cash problems.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Automobiles industry and the overall market, TESLA MOTORS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 31.56%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -2.64% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: TSLA Ratings Report