Tesla Analyst Predicts The Sentiment 'Freight Train' Will Send Shares Up Another 50%
Earlier, Stifel Nicolaus put a new buy rating on the stock, with a $400 price target.
That is nearly 50% higher than its pre-Labor day weekend price of $269.70.
The ambitious target comes after a visit Stifel's James Albertine offered a new lens through which we should be viewing Tesla's market opportunity. If you accept the company as a "slightly bigger than niche" global luxury auto manufacturer, you realize it has practically no rivals when it comes to electric vehicles.
"It appears TSLA's primary competition remains reluctant to fully dedicate the resources necessary for developing a suitable Model S/X competitor with 200-300 miles of EV range," he writes. There are about 14 million high-net-worth individuals around the world with $1 million or more of investable wealth (ex-real estate), he says, citing the Capgemini World Wealth Report 2014. If any of them are in the market for an electric vehicle, Tesla is likely to be the first company they turn to thanks to what he says is a clear brand message, differentiated curb appeal, and overseas growth rate. "As it seems even the luxury competitors struggle to compete on a pure-EV basis with TSLA, it seems conceivable TSLA can continue to ramp production/deliveries globally at well north of a 100k units per year rate, excluding Gigafactory output and Model III introduction."
Albertine also recently visited Tesla's Fremont factory. "The rate of change vs. our last tour (May 2013) was staggering," he said.
Among other things, he found himself impressed with the amount of insourcing Tesla has achieved. There are now 120 robots putting together Model S vehicles on a repurposed ground conveyor system from a Toyota Tacoma production line. In-house production, he argues, helps improve the yield and quality of the factory's output. He now predicts the company can achieve a 1,000 units-per-week production rate by the end of the year, and remains on track to achieving its 2,000 units-per-week target by 2015. They're currently at about 800 units a week, he says. Tesla plans to add a second body assembly line in Spring 2015 to help pump out Model X SUVs, he notes, and the firm has promised the same kind of vertical integration for its lithium ion battery "Gigafactory."
The ultimate driver of company's share price, he says, may simply be momentum.
"Tesla sentiment is like a freight train, in our view, benefiting from a well-manicured growth story that has caught the eye of a much broader investor base relative to most auto stocks," he says.
Tesla shares are up 80% year-to-date in 2014, and more than 850% over the past two years:
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