Tesla Shares Climb This Week on Credit Suisse Upgrade

Electric vehicle maker Tesla started off the week well this week after receiving an upgrade from Credit Suisse.

The company saw its shares jump over 10% on Monday after the note came out.

Credit Suisse upgraded Tesla to “outperform,” citing margin improvements and the promise of FSD.

Shares had previously declined almost 20% year to date. Recently CEO Elon Musk informed shareholders on an earnings call that Tesla would not be making any new vehicle models in 2022. This includes the Cyberbtruck, an experimental pickup.

Tesla’s gross margins and profitability are ahead of everyone, remarked a Mizuho analyst.

Credit Suisse has a price target of $1,025 on shares of Tesla now. Analyst Dan Levy wrote in a note out on Monday, “Tesla has surprised to the upside on margins, in large part driven by cost reductions; we believe the strong margins are sustainable.”

He added, “We believe legacy OEMs are taking clear steps to transitioning to an EV world, yet we expect Tesla to maintain a lead for the foreseeable future.”

The note also read, “Up until now Tesla margins have largely been a function of auto hardware sales, with some modest benefits of software…specifically FSD (Full Self-Drive features).

However, as Tesla releases more FSD features and unlocks more deferred revenue (which likely flows through at 100% contribution margin), Tesla should see incremental margin benefit.”

Last weekend Musk said on Twitter, “Tesla will support FSD licensing by other manufacturers,” but did not clarify when or whether any automakers had expressed interest.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.