News Column

Biz Break: Tesla heads toward record amid Model X optimism

August 6, 2014

By Jeremy C. Owens, San Jose Mercury News

Aug. 06--Today: Analysts write about potential for Tesla's next offering, and the electric car maker's shares enjoy best day in months. Also: FireEye and Rocket Fuel fall, Pandora gains after breakthrough deal.

The Lead: Tesla hits best prices in five months amid Model X optimism

Tesla Motors roared to its highest stock prices since March on Wednesday, as two investment banks predicted the SUV-style Model X could push the electric car maker's shares higher than $300.

Tesla shares jumped 4.4 percent to $248.93 Wednesday, its best one-day performance in nearly two months and within shouting distance of its record intraday high of $265. Morgan Stanley and Pacific Crest analysts released separate notes Wednesday that predicted that price will increase substantially in the future thanks to the coming launch of the Model X.

"Some in the market have described Tesla as a 'one hit wonder' with the Model S. We expect the Model X will put that to rest very, very quickly, Morgan Stanley analyst Adam Jonas wrote, later adding, "We'd be disappointed if the Model X did not sweep every major Car of the Year award by the automotive media."

Tesla showed off the Model X in Palo Alto last year, and expects to begin sales of the car in 2015. The company recently stalled its production line to upgrade its equipment in preparation for its next offering, a move that led CEO Elon Musk to predict that Tesla would be able to produce 100,000 cars in 2015, a huge jump from predictions of more than 35,000 this year.

Pac Crest analyst Brad Erickson chimed in with his own rosy view of Tesla's future, initiating coverage of Tesla with a $316 price target and writing, "we believe optimism around the launch of the Model X is likely to continue to rise."

Erickson added that any uncertainty about the Model X launch should be ameliorated by Tesla's next moves, which include plans for a massive battery factory called the Gigafactory that Musk hopes will bring down costs enough to launch a lower-cost electric sedan called the Model 3 in 2017.

While getting its production line back up and running with new equipment, Tesla announced Wednesday that it added a female member to its board of directors, Juniper executive Robyn Denholm. Tesla's board had been male-only since the departure of founding board member Laurie Yoler in 2008, though Nancy Pfund was a board observer from 2006 to 2010. The company also settled a trademark dispute in China, an important market for Tesla as it looks to grow revenues.

SV150 market report: Post-earnings declines hurt Silicon Valley stocks

Wall Street barely moved Wednesday, as Silicon Valley tech stocks were held back by post-earnings declines from two companies that joined the market on the same day in 2013.

Redwood City ad-tech company Rocket Fuel lost nearly a third of its market valuation Wednesday and Milpitas security software company FireEye plunged more than 10 percent after the companies disappointed investors with Tuesday afternoon earnings reports. FireEye beat expectations for sales, earnings and billings, but the firm's complex report, as outlined by Morgan Stanley analysts, seemingly had enough negative inclusions to warrant an 11.4 percent decline to $30.78.Rocket Fuel had a much steeper decline, falling 31.1 percent to $17.05, its lowest stock price as a public company, after lowering its estimates for 2014 financial performance and admitting to customer concerns about the quality of its advertising referrals. SuperMicro also suffered after its earnings report, declining 7.7 percent to $24.81, while Bio-Rad was the sole post-earnings success story, with a 4.4 percent gain to $121.28.

Pandora Media gained 1.6 percent to $25.29 after signing a breakthrough licensing deal with Merlin, a group that represents thousands of independent music labels; CEO Brian McAndrews told CNet that this type of deal could lead to international expansion for the Oakland streaming-music firm. Apple dropped 0.2 percent to $94.96 after striking a patent truce with Samsung that does not include its San Jose court battle, and Google added 0.2 percent to $574.49 after locking up two more acquisitions, of the Emu mobile-messaging app and mobile video startup Directr. Palo Alto's Tibco Software had the day's largest percentage gain in the SV150, adding 7.5 percent to $20.75 after the Wall Street Journal reported CEO and Sacramento Kings owner Vivek Ranadive has been shopping for buyers for the company. Symantec followed rival FireEye's earnings report by beating analyst expectations with net income of $236 million, or 34 cents a share, on sales of $1.74 billion, and shares gained about 1 percent in late trading. San Mateo-based WageWorks gained 4 percent to $45.96 after pulling off a $118 million acquisition, and Hewlett-Packard fell 0.1 percent to $35.04 amid another executive shake-up.

Up: Tesla, SolarCity, Netflix, Pandora, Applied Materials, VMware, AMD

Down: Splunk, Zynga, Workday, Adobe, SunPower, Twitter, Symantec, Salesforce

The SV150 index of Silicon Valley's largest tech companies: Up 1.09, or 0.07 percent, to 1,533.97

The tech-heavy Nasdaq composite index: Up 2.22, or 0.05 percent, to 4,355.05

The blue chip Dow Jones industrial average: Up 13.87, or 0.08 percent, to 16,443.34

And the widely watched Standard & Poor's 500 index: Up 0.03 to 1,920.24

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Sign up for the 60-Second Business Break newsletter at www.siliconvalley.com. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.

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(c)2014 San Jose Mercury News (San Jose, Calif.)

Visit the San Jose Mercury News (San Jose, Calif.) at www.mercurynews.com

Distributed by MCT Information Services


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Source: San Jose Mercury News (CA)


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