Tesla stock set to hit $550 after S&P stamp, analyst says
Tesla stock price reported a more than 8% increase after S&P announced to add the largest electric vehicle maker to the index. Bulls applauded the news as they have long been waiting for the S&P stamp on the electric vehicle maker.
The market analysts believe Tesla stock is likely to surge sharply in the days ahead. Several catalysts including the robust increase in production and deliveries are also backing share price gains.
S&P will add Tesla in two separate tranches
S&P Dow Jones announced in a press release that Tesla stock will be added to the index by 21 December as the company is complying with all the requirements.
Tesla has generated profits in the past five straight quarters, exceeding the requirement for four quarterly profits in a row. In addition, its market cap and liquidity position is also matching with S&P requirements.
However, the committee is unsure about how to add it to the index.
“S&P Dow Jones Indices is seeking feedback through a consultation to the investment community to determine if Tesla should be added all at once on the rebalance effective date or in two separate tranches ending on the rebalance effective date,”
the S&P Dow Jones committee said in a press release.
Bulls expect Tesla stock to hit $550
CFRA has provided a strong buying rating, with a price target of $550. The firm expects the EV maker to generate earnings per share in the range of $2.30 this year and $3.50 per share in 2021.
“We had viewed TSLA’s addition to the index as an eventuality and was the primary reason why we raised our opinion on the shares to Strong Buy from Buy on October 30. We expect TSLA shares to trade sharply higher on the news, noting the stock’s 20% drop the day after the September rebalancing was announced and it was not included,”
CFRA analyst Garrett Nelson.