Tesla Gets Upgrade as Pandemic Gives It 'More Edge' in EV Development

Credit Suisse analyst Dan Levy says that the coronavirus pandemic will make it more difficult for legacy automakers to catch up to Tesla on electric vehicles.
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Shares of Tesla  (TSLA) - Get Report rose in premarket trading Tuesday after Credit Suisse upgraded the stock to neutral from underperform despite a recent wave of bad news for the country’s biggest maker of electric cars.

Credit Suisse analyst Dan Levy lifted his price target for Tesla shares to $580 from $415.

Tesla has “more edge” with electric vehicles poised to replace conventional ones, he wrote in a report.

“Coronavirus disruption will make it more difficult for legacy automakers to balance the long-term shift to EV in the face of near-term cycle disruption,” the analyst added.

Tesla leads its competitors in battery development, has increased its liquidity and is showing signs of improvements in execution, Levy said, according to Bloomberg.

He acknowledged that falling demand and possible supply shortfalls were short-term risks for Tesla. He judges that the company is burning cash at the rate of $300 million per week because of the shutdown at its Fremont, California, plant. That will likely slash deliveries to 400,000 this year from his prior estimate of 550,000.

More bad news came out about Tesla Tuesday. The company has sought rent reductions from some of its landlords, as it looks to preserve cash after the electric car company's operations were stalled by the coronavirus outbreak, The Wall Street Journal reported.

Bloomberg counts 15 analysts with hold ratings on Tesla, 14 with sells and only seven with buys.

Tesla shares stood at $699.03 in premarket trading, up 7.39%. The stock surged 13.6% Monday. It has jumped 24% over the last three months, with all of that gain and more coming since April 2.