Friday was a pretty quiet day for the Nasdaq Composite (^IXIC 0.10%). Investors are largely waiting to see whether the favorable trends that have helped the Nasdaq claw back huge losses during the bear market in February and March will continue to lift stocks toward new all-time highs. As of 3 p.m. EDT, the Composite was down about 0.25%, with the Nasdaq-100 Index also seeing modest declines.
Yet some favorite stocks continued to shine. Tesla (TSLA 12.06%) got another boost as the stock analyst community weighed in on the electric vehicle manufacturer. Meanwhile, Applied Materials (AMAT 1.46%) released its latest quarterly results, and investors generally liked what they saw.
Giving up on fighting Tesla
Tesla's stock climbed about 1.5%, adding to its recent gains. The automaker got a couple of upgrades from stock analyst companies, both of which had been extremely bearish about Tesla before their moves.
Image source: Tesla.From press kit, use approved-https://teslamotorsinc.sharepoint.com/sites/publicpresskit/Documents/Forms/AllItems.aspx?originalPath=aHR0cHM6Ly90ZXNsYW1vdG9yc2luYy5zaGFyZXBvaW50LmNvbS86Zjovcy9wdWJsaWNwcmVzc2tpdC9FckNlTWRBZFI3cENuc1pEMUc4VV9NRUJGaWZ4ZERYTEhkZ3J4eF96M0ZtVGpBP3J0aW1lPVoyb2RRWVJBMkVn&id=%2Fsites%2Fpublicpresskit%2FDocuments%2FTesla%20Press%20Kit%2FPhotos%2FSemi%2FExterior%2FSemi%5FFront%5F34%2Ejpg&parent=%2Fsites%2Fpublicpresskit%2FDocuments%2FTesla%20Press%20Kit%2FPhotos%2FSemi%2FExterior
At BofA/Merrill Lynch, analysts upgraded the stock from underperform to neutral, and they more than doubled their price target on the shares, going from $800 to $1,750 per share. Interestingly, one primary justification for the upgrade used slightly circular reasoning, pointing out that the soaring stock price gives Tesla superior access to capital that other companies at its stage of development would ordinarily never get. That's a long-term positive for Tesla. It was also amusing to see the analysts note that their $1,750 price target is based on the current capital structure and will change to a $350 target once Tesla's 5-for-1 stock split takes effect.
Meanwhile, Morgan Stanley made a similar move, taking its rating on Tesla from underweight to equal weight. Its price target boost was more conservative, going from $1,050 per share to $1,360. Morgan Stanley made more fundamentally based arguments favoring Tesla, noting that its prior analysis hadn't given enough weight to the value of the battery technology that the automaker has developed.
Tesla's recent stock split announcement has a lot of people paying attention to the company once again. The company has been controversial for a long time, but its business has nevertheless had strong positive momentum that makes it easier to understand why its stock has produced such large gains.
Chipping away
Elsewhere, Applied Materials had a good day, with its stock rising about 3.5% as of 3 p.m. EDT. The provider of materials engineering solutions for makers of semiconductor chips and advanced displays had a solid performance in its fiscal third quarter of 2020.
Applied Materials enjoyed big gains in both sales and earnings. Revenue jumped 28% from year-earlier levels, lifted in large part by improved demand in its foundry and logic segment. Adjusted net income soared 41% year over year.
Investors also seemed pleased by what Applied Materials said about its immediate future. The tech company expects sales of $4.4 billion to $4.8 billion in the fiscal fourth quarter, with earnings coming in between $1.11 to $1.23 per share on an adjusted basis.
CEO Gary Dickerson was happy with the results, noting that "by addressing our customers' highest value problems, Applied is outperforming today and is positioned to grow faster than our markets over the next several years." If that's the case, then today's stock price advance could be just the beginning of a nice run for Applied Materials.
