NEW YORK (TheStreet) -- Shares of Tesla Motors (TSLA) - Get Report are up 1.52% to $202.66 in afternoon trading today after the company said its cars were approved for a program in Shenzhen, China, that sets aside license plates for new-energy vehicles, giving the automaker a boost in a market where sales have trailed expectations, Bloomberg reports.
The program, which reportedly starts today, allows buyers of Tesla's Model S electric sedan to apply for one of the coveted 20,000 license plate tags annually allocated to the program in the Chinese city. Regular license plates in Shenzhen are obtained through a lottery and auction system to manage pollution, which makes them difficult to get.
The move comes as the company restructures its Chinese operations. The Palo Alto, CA-based high-end electric vehicle maker said recently it was cutting jobs in China after missing a sales target in the world's biggest car market, according to Reuters.
Also,, Pacific Crest recently lowered their price target on the stock to $293 from $300, while maintaining their "buy" rating.
"Bears cling to the notion that demand is not sustainable, China may never happen and execution issues that have plagued the company recently will persist. Bulls believe the recent near-term hiccups are just noise and longer term opportunity should be the focus. We wouldn't disagree. We think Tesla has established an extremely difficult-to-achieve foothold at the high end from which it can continue building momentum with future product cycles, provided there is reasonably solid execution. We remain buyers of the stock," analysts said.
Separately, TheStreet Ratings team rates TESLA MOTORS INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESLA MOTORS INC (TSLA) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, poor profit margins and generally high debt management risk."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Automobiles industry. The net income has significantly decreased by 561.8% when compared to the same quarter one year ago, falling from -$16.26 million to -$107.63 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness 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.
- Net operating cash flow has significantly decreased to -$86.40 million or 166.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The gross profit margin for TESLA MOTORS INC is currently lower than what is desirable, coming in at 34.46%. Regardless of TSLA's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TSLA's net profit margin of -11.25% significantly underperformed when compared to the industry average.
- The debt-to-equity ratio is very high at 2.51 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, TSLA's quick ratio is somewhat strong at 1.02, demonstrating the ability to handle short-term liquidity needs.
- You can view the full analysis from the report here: TSLA Ratings Report
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