Tesla Motors Inc (NASDAQ:TSLA) shares were taking a beating this morning as the stock declined as much as 4 percent in morning trading. But Barclays analysts continue to see the stock as fairly valued, although they did slightly reduce their earnings per share estimate for the company’s 2014 fiscal year.
Tesla estimates adjusted
Analysts Brian A. Johnson, Dan Levy and Steven Hempel issued a report to investors adjusting their earnings per share estimates for the EV automaker slightly. They also reiterated their Equal Weight rating and $141 per share price target for the stock. Their target is still above the stock’s current trading price, although it’s well above the bearish estimate given by Aswath Damodaran, which may be part of the reason for today’s continued share price decline.
Barclays analysts kept their earnings per share estimate for Tesla Motors Inc (NASDAQ:TSLA)’s current year at $1.08 per share and lowered their estimate for next year to $3.60 per share—a reduction of 5 cents. They lowered their estimate for next year because of lower interest income.
Why is Tesla rated Equal Weight?
Even though there are still plenty of bearish estimates hinting at much lower price targets for Tesla, the analysts at Barclays continue to see shares of the automaker as being fairly priced. They note that demand is still strong for the company’s Model S sedan and that Tesla is making progress on improving its gross margins. They said even though there is still uncertainty about whether Tesla Motors Inc (NASDAQ:TSLA) will find success with its Generation III vehicle and become a mass market automaker, they believe the current share price reflects such success.
They note upside to Tesla shares if the company becomes a mass market automaker and then goes on to generate $25.35 per share in earnings in eight years. They said this would suggest a price of $279 a share with an 11 times multiple.
However, they said the downside price for Tesla Motors Inc (NASDAQ:TSLA) is if the company is only successful with its high-end Model S sedan. They said this downside suggests $87 a share in value with earnings of $5.91 per share in three years, a 17 times multiple and a 5 percent discount value.