Tesla’s addition of Larry Ellison to board is a ‘home run appointment’, analyst says

Tesla Inc.’s addition of Oracle Corp. founder Larry Ellison to its board is a “home run appointment” for the company that will boost the stock on Friday, according to one analyst.

Walgreens Boots Alliance’s WBA, -0.50%  Global Chief Human Resources Officer Kathleen Wilson-Thompson will be the “second impressive” independent director, said Wedbush analyst Daniel Ives, a longtime Tesla bull.

Tesla TSLA, +1.41%  announced the addition of the two new directors earlier Friday, as it moved to comply with one of the conditions of the settlement with the Securities and Exchange Commission struck by Chief Executive Elon Musk over his going-private tweet earlier this year.

Musk irked the regulator with a tweet that implied he had secured funding for a deal when he had not. The executive agreed that he and his company would each pay a $20 million fine, that he would resign as chairman of the board and that the company would add two new independent directors to beef up corporate governance.

“Given Ellison’s stature in tech circles, strong reputation in the Valley and on the Street, and vast accomplishments at Oracle ORCL, +0.42%  among other achievements over the past 40 years, the addition of Mr. Ellison on the board, in our opinion, is another key step forward for Tesla and Musk as the company starts to build an independent and well regarded board that can help the company navigate through transformational opportunities in the electric vehicle market over the coming years with competition and production complexity a key factor that needs to be handled without a major speed bump,” Ives wrote in a note.

Read now: Tesla’s 2019 challenge? To remain profitable quarter after quarter

Ellison, who is also Oracle’s chief technology officer, helped build the software giant from the ground up to become a tech stalwart, he wrote. His addition may remove an overhang on the stock if he can help channel Musk’s energy and passion into positives and shift attention away from the going-private debacle.

“There are a number of pieces to the puzzle that Tesla needs in order to capitalize on what we view is a transformational EV market opportunity over the next decade, with one of these key areas being a strong and sound Board that can successfully guide Musk & Co. to capture this pent up Model 3 demand worldwide, while achieving sustainable profitability/cash flow in this balancing act,” said Ives.

See also: In defamation defense, Elon Musk claims his ‘pedo guy’ tweet wasn’t serious

Related: Tesla shares move higher as analyst predicts strong demand and profitability in 2019

Wedbush has an outperform rating on the stock, the equivalent of buy, with a $440 12-month price target, which is about 36% above its current trading level.

In a statement, the Tesla board said the two new directors were selected after a search that involved evaluating candidates with a range of skill sets and strong belief in Tesla’s mission of moving the world to sustainable energy. Ellison demonstrated that belief earlier this year when he purchased 3 million Tesla shares, said the statement.

Shares rose 3% in early trade and are up 5% in 2018, while the S&P 500 SPX, -0.02%  and the Dow Jones Industrial Average DJIA, -0.02%  have fallen about 6%.

See: This timeline charts Elon Musk’s dramatic rise to internet fame (or descent into internet infamy

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