Tesla Motors Inc (TSLA), Groupon Inc (GRPN) & Bankrate Inc (RATE): Are Analysts Ahead of the Curve on These Stocks?

Analysts are usually revered in the market, and even though they are often proved wrong, a formidable counter attack to their line of thinking can only be successfully presented with the help of hindsight. While the amount of research that goes into their recommendations is phenomenal, they have their own share of mistakes like most other people.

This naturally begs the question if the recent stock upgrades of Tesla Motors Inc (NASDAQ:TSLA) , Groupon Inc (NASDAQ:GRPN) , and Bankrate Inc (NYSE:RATE) fall into the oversight category.

The upgrades

By now, Tesla Motors Inc (NASDAQ:TSLA) is a known name and even the staunchest critics of the idea of battery powered vehicles reckon that it has done a nifty job in the nascent market. The company has recently released a barrage of encouraging updates about its products — aimed at making these expensive vehicles affordable to mass market users.

The company, which has already run up in expectations of turning profitable soon, also got support from a recent price target upgrade by Baird from $45 to $62. Tesla Motors Inc (NASDAQ:TSLA) shares have gained over 60% in the last 12 months, and currently trade at a forward price earnings multiple of 40.9.

In all fairness, the company is an Apple Inc. (NASDAQ:AAPL)-wannabe and most of its bets have played out well so far, but these are expensive valuations at any standards. This is not to suggest that the company is doomed, but one should know it is not a good time to enter a stock when Tesla Motors Inc (NASDAQ:TSLA)’s price crosses 50 times the book value per share.

Groupon makes comeback on analysts’ radar

Another stock that has received ratings upgrade recently is Groupon Inc (NASDAQ:GRPN). Analysts at Evercore Partners reckon the stock is worth $5, up from earlier target of $4.30. Interestingly, this reflects a discount to its current market price. The company is likely to present its first-quarter earnings on May 13, and going by the recent quarterly updates, it could be yet another instance of depressed numbers.

Management should be given full marks for maintaining top line growth even though its losses continue to swell. In the December quarter, revenue grew 29.7% to $638.3 million, but losses widened to $80 million from $59.7 million in the fourth quarter of 2012. The stock has recovered smartly from its November lows and has advanced 38% in the last six months, but a forward price to earnings ratio of 20 means further upside may be limited.