What's next for Tesla? Join the S & P, says an analyst

Tesqu Inc. "checks all the boxes", with the exception of an important decision to include in the S & P 500, said Macquarie Research Thursday, reinforcing the actions of the automaker's Silicon Valley during a mixed day for the stock market.

Even this missing part – the constant profitability – will arrive for Tesla

TSLA, + 0.93%

After the second quarter of 2019, Macquarie analyst, Maynard Um, wrote in a note.

Tesla surprised the markets last month by announcing GAAP for the third quarter and adjusted earnings, but several Wall Street analysts have expressed doubts that this will happen in the coming quarters.

During an in-depth interview last week, Elon Musk, President and CEO of Tesla, promised Tesla positive cash flow, which "would spill over every quarter" and that Model 3's production produced "disproportionate" results.

The methodology of the index requires that the sum of the last four quarterly results of the company and its last quarter be a positive figure.

"While (Tesla) has yet to prove that it can maintain its profitability, we believe that the company will satisfy this last eligibility condition, thanks to a constant demand from Model S & X, to a growing production to meet the Model 3 demand and significant potential (zero emission vehicle.) credit income, "said Um.

But even if Tesla manages to achieve the obligation of profitability, it is not a hay. In his memo, Um acknowledged that the S & P does not reveal how he decides which stocks to add after checking all the eligibility boxes.

Yet join the S & P 500

SPX, -0.25%

release a stream of new money from a myriad of funds, including pension funds, mutual funds and exchange-traded funds, that follow the large-cap benchmark or impose restrictions as to the shares to be added to their assets.

The 500 companies in the index are considered an approximation of the US equity market. The other key reference, the Dow Jones Industrial Average

DJIA, + 0.04%

is an even more exclusive club, made up of 30 companies.

Twitter Inc.

tWTR, -2.31%

in June, joined the S & P group, replacing Monsanto Co., acquired by Bayer AG.

BAYN, -1.15%

Macquarie's Um said it looked at the 12 most recently added S & P stocks and found that if their performance was uneven from one group to the next, those that did not exist before in the S & P Mid Cap

MIDDLE, -0.42%

Prior to their inclusion in the S & P 500 championship, the stock price had risen an average of 6.9%, compared with an average 0.2% for the S & P 500 on the day of the announcement .

Tesla, which trades on Nasdaq, does not feature on S & P indices, including the S & P SuperComp 1500

SPSUPX, -0.26%

a combination of S & P's large, medium and small capitalization indices.

Um has maintained her Tesla stock rating at the equivalent of her purchase, with a target price of 430 USD, one of the highest on Wall Street. Analysts on average have a price target of 321 USD on Tesla, which would represent a drawback of about 9% compared to Thursday's share price.

Tesla shares grew by 13% this year and 15% over the last 12 months, compared to 5.2% and 6.2% for the S & P and DJIA this year and 8.4% and 11% respectively. % for the last 12 months.