Tesla Motors Inc (NASDAQ:TSLA) shares soared on Thursday after the company smashed earnings expectations Wednesday evening. In the wake of that rise, Barclays analysts have downgraded the stock from Overweight to Equal Weight, although like analysts at Wedbush, they raised their price target for the stock. They said shares have passed what they believe is a fair value for the stock based on the uncertainty of whether it will be able to succeed in mass market vehicles.

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Valuing Tesla Motors Inc (NASDAQ:TSLA on probability

Analysts Brian A. Johnson, Dan Levy and Steven Hempel issued a report to investors on Thursday explaining what they see as the best way to value Tesla Motors Inc (NASDAQ:TSLA). They believe investors should set aside the stock’s momentum and the technical aspects of short covering and instead focus on valuing it based on probability. They believe this view takes into account the risks associated with the automaker’s ramp-up and also the option value that it could become a major mass market automaker.

In spite of their downgrade of Tesla, they actually increased their price target to $141 per share from $90 per share, based on their valuation of the company through probability. The analysts said this assigns a greater than 50 percent probability that Tesla Motors Inc (NASDAQ:TSLA) will be able to successfully break into the mass auto market. It also includes some ability for the company to become “a true mass market automaker.”

Momentum could carry Tesla Motors Inc (NASDAQ:TSLA upward

The Barclays analysts said in the near term they wouldn’t be surprised to see Tesla’s momentum carry its stock up close to $200 per share. In fact, they even see some upside to $279 per share if investors assume that the company becomes successful in the mass market.

They said the bull argument for Tesla Motors Inc (NASDAQ:TSLA) would be that the company’s chief executive officer Elon Musk is the next Henry Ford, which would assure that mass market success in the company’s future. They said the EV automaker’s second quarter results strengthened the bull case by indicating that demand remains strong and that clear progress on gross margins was made.

Tesla now has “a stronger track record and better credibility,” although Barclays analysts still caution that there’s uncertainty regarding Tesla’s future as a mass market auto producer.

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