UBS analyst Colin Langan points out that since reaching a two-year low in February, shares of Tesla (TSLA) have risen almost 60% following the carmaker’s Q4 earnings report.
Since Tesla trimmed its 2016 delivery guidance, the share rally is likely due to the company’s Asset Based Lending draw down, Langan told investors last night in a research note. By drawing down the rest of its $1B ABL, Tesla has pushed out near-term liquidity concerns, the analyst contends. Logan adds that Model 3 excitement coupled with the recent recovery in gas prices have also boosted investor sentiment. Nonetheless, persisting fundamental headwinds in Tesla’s storage business should not be ignored, nor should its eventual need to raise cash, Langan writes.
The analyst believes the stock’s recovery is not supported by fundamentals and he keeps a Sell rating on Tesla with a $140 price target. The stock closed yesterday up $2.51 to $230.26.
