Tesla stock price target raised, but RBC analyst says it is ‘fundamentally overvalued’

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A bearish analyst on Tesla Inc. is now a little less bearish, saying the electric vehicle maker has become one of the most important stocks in the U.S. stock market, but said the stock remains fundamentally overvalued. The stock surged 6.8% in premarket trading Tuesday, after soaring 12.6% on Monday. RBC Capital’s Joseph Spak lifted is price target to $290, which implies a 42% drop from Monday’s record close of $498.32, from $170, while maintaining his underperform rating. “We recognize we underestimated a critical valuation point: seemingly insatiable investor demand for alternative/clean vehicles,” Spak wrote in a note to clients. He said he also believes investors have willing to show more patience and look further out for companies like Tesla. “That being said, we struggle to explain the run-up to the stock split which academically doesn’t change the value of Tesla equity but could help fuel investor interest,” Spak wrote. “We still view Tesla as fundamentally overvalued and having to grow into its valuation.” Of the 36 analysts surveyed by FactSet, just 19% are bullish, 31% are bearish, and 50% are neutral. Since Tesla announced the 5-for-1 stock split after the Aug. 11 close, the stock has soared 81.3% through Monday, while the S&P 500 has gained 5.0%.
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