Today: Tesla stock reaches record intraday and closing prices as analysts prepare for earnings announcement amid reports of Apple acquisition interest. Also: Tech stocks move higher despite a decline from Hewlett-Packard.
The Lead: Tesla closes above $200 for first time ahead of earnings report
Tesla Motors stock reached all-time highs yet again Tuesday, as Wall Street returned from a long weekend to an analyst upgrade ahead of the electric car maker's fourth-quarter earnings announcement as well as a report that CEO Elon Musk met with the head of mergers and acquisitions at Apple last year.
After topping $200 in intraday trades last week for the first time, Tesla moved as high as $206 Tuesday and closed above the mark for the first time, gaining 2.8 percent to $203.70. Some analysts believes the stock is worth more, with Baird and Litchfield Hills Research analysts increasing their price targets Tuesday.
Baird analyst Ben Kallo increased his target price for Tesla from $187 to $215 Tuesday, explaining that he believes the company will announce higher sales totals than expected when the Palo Alto company releases its earnings report Wednesday afternoon, and could surprise with other announcements.
"We believe several catalysts could drive the stock higher including 2014 delivery guidance, additional battery factory details, and a possibility for more info on a new production line," the analyst wrote.
Litchfield Hills Research analyst Theodore O'Neill bumped his price target from $188 to $222, predicting that Tesla's huge 2013 growth rate will slow in 2014, but cost savings from continued growth in production will help gross margins at a company he says is misconstrued by many investors.
"As long as there is a large group of investors who compare Tesla to a traditional automaker, the stock will remain undervalued in our opinion," O'Neill wrote. "We feel that investors underestimate the appeal of the Model S and the sales and service experience."
Other analysts contacted by Bloomberg pointed in another direction than price target increases for Tuesday's optimism, though: A San Francisco Chronicle report released Sunday that claimed Tesla CEO Elon Musk met with the head of Apple's head of mergers and acquisitions last year, sparking renewed rumors about a possible acquisition.
While the report caused a stir, it cited only a single, unnamed source on the meeting's occurrence, and did not provide any specifics about what happened beyond Musk supposedly meeting with executive Adrian Perica and "probably" CEO Tim Cook.
Analysts wasted little time in shooting down the possibility of Apple acquiring Tesla.
"I would put zero chance of a merger," Jeffries analyst Peter Misek told CNBC on Tuesday.
"There's no indication" that Apple may acquire Tesla, Stifel Nicolaus analyst James Albertine told Bloomberg; Albertine concurred with three other analysts that the report helped juice Tesla stock Tuesday.
Instead, analysts said, Apple and Tesla could work together, similar to Musk's collaboration dalliance with Google on driverless cars.
"(Steve Jobs') departure has left a big gaping hole even now with all the talent they have at Apple, so they would certainly look to collaborations and Musk certainly fits that bill," Misek told CNBC, mentioning Apple electronics appearing in the back seat of Tesla's upcoming Model X SUV as a possible target for both companies.
Tesla will reveal the total number of 2014 sales in Wednesday's earnings report, but the company already announced last month that it sold 6,900 Model S units in the fourth quarter, higher than expected at the time. The electric car company has outlasted rivals such as Fisker Automotive, a Southern California electric car company that had its remaining assets sold in an auction to a Chinese company, but still faces possible issues stemming from an ongoing federal investigation into car fires in the Model S.
Apple shares gained 0.4 percent to $545.99 in the wake of the report, which also highlighted the Cupertino company's reported plans to focus on health with a possible wearable product this year. The company was named the world's most valuable brand for the third year in a row while it adroitly deals with difficulties in selling iPhones in Russia.
SV150 market report: Silicon Valley tech stocks gain despite HP's decline
Wall Street moved very little overall Tuesday as traders returned from a long weekend, but Silicon Valley technology stocks enjoyed strong gains in spite of a drop from the second-largest tech company in the Bay Area, Hewlett-Packard.
HP dropped 1.5 percent to $29.58 after a report called into question how much the Palo Alto tech giant knew about Autonomy's finances before entering into its big-money acquisition of the British software firm. HP has written down $8.8 billion of the roughly $11 billion it committed to the purchase of Autonomy and claimed that the company misrepresented its financial state in the lead-up to the acquisition, counting computer sales as software sales and not subtracting the cost of making the machines among other tricks. After investigating the information HP was provided before the sale, though, the Financial Times said Tuesday that the company knew about the hardware sales that were masking poor results in the core software division, or at least should have known based on the information the company was provided. The report adds to an interesting cache of information in the case, which includes Air Force documents backing HP's claims, that will end up as evidence in HP's battle to prove malfeasance.
Silicon Valley's video game stocks enjoyed a strong showing Tuesday after "Candy Crush Saga" maker King Digital moved ahead on an initial public offering, with Zynga gaining 5.8 percent to a 52-week closing high of $5.15 and Electronic Arts advancing 3 percent to $28.40. Netflix moved 0.3 percent higher to $436.85 and hit new all-time highs despite possibly losing steam on the Los Gatos company's efforts to be distributed through Time Warner Cable's set-top boxes. Google also reached record prices again Tuesday, gaining 0.7 percent to $1,210.88 while securing new office space in San Francisco and striking a deal with a prominent advertising buyer. Pandora joined the party as well, hitting all-time highs while gaining 5.1 percent to $37.97, and Elon Musk's other Silicon Valley company, SolarCity, reached record prices as well and increased 8 percent to $79.95.
Up: SolarCity, Zynga, Pandora, SunPower, Ruckus, Gilead, LinkedIn, EA, Tesla, Yelp, Intuit, Salesforce, Twitter, eBay, Google, Workday
Down: Symantec, HP, Cisco, Applied Materials, NetApp, Nvidia, Oracle
The SV150 index of Silicon Valley's largest tech companies: Up 8.97, or 0.58 percent, to 1,565.74
The tech-heavy Nasdaq composite index: Up 28.76, or 0.68 percent, to 4,272.78
The blue chip Dow Jones industrial average: Down 23.99, or 0.15 percent, to 16,130.4
And the widely watched Standard & Poor's 500 index: Up 2.13, or 0.12 percent, to 1,840.76
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.