By Sam Boughedda
Edward Jones analysts upgraded Tesla (NASDAQ:TSLA) to Buy from Hold, also adding the stock to the firm's Focus List in a note to clients on Thursday.
At the time of writing, Tesla shares are down almost 3%, following a more than 5% gain in Wednesday's session.
The analysts explained that while Tesla's stock price has declined significantly over the past year — down over 70% — due to slowing economic growth and concerns about CEO Musk's time spent managing Twitter, they believe the electric vehicle (EV) market will continue to expand due to global regulations. That is despite economic headwinds potentially pressuring near-term auto sales.
"Global regulations on emissions and mileage are driving the growth of EVs. While competition is rising, we expect Tesla to continue to have a significant presence in global markets," writes the analysts.
On Musk, the analysts believe that while Tesla has a solid management team that can execute the current operational programs, Musk stepping away from Twitter would benefit Tesla. In addition, "new products and technologies should improve profitability," they argue.
"Programs that have software or ongoing subscriptions, such as full self-driving, are especially important for Tesla, as they are expected to be more profitable. Additionally, Tesla is working to improve manufacturing efficiency and reduce costs. Specifically, ongoing design improvements with batteries should reduce costs and help to improve profitability," the analysts added