Tesla Motors Inc (NASDAQ:TSLA) shares fell more than 7% during the regular trading day on Thursday, marking yet another day of big declines for the automaker. Some analysts, like those at Wedbush, cut their price target for Tesla, but others, like those at Deutsche Bank, still say it’s heading to $200 a share.
Deutsche Bank sees 40% premium on Tesla
Analyst Dan Galves of Deutsche Bank issued a research note this week maintaining his $200 a share price target for Tesla Motors Inc (NASDAQ:TSLA), according to Mamta Badkar of Business Insider. That’s a 40% premium to the automaker’s current share price. Galves says Tesla can still be at the leading edge of a major transportation shift and that the automaker benefits greatly from its direct to consumer sales model.
Galves believes Tesla will be able to achieve premium margins compared to the margins of traditional automakers. He says those who buy the company’s vehicles save money on fuel and maintenance, so they’re willing to pay more for them up front. Meanwhile, since Tesla sells vehicles directly to consumers, it saves most of the margin that would otherwise go to a dealer.
Seeing potential in Tesla
According to Galves, Tesla Motors Inc (NASDAQ:TSLA)’s volume growth could end up being “massive” in a global market with 85 million units. He believes the automaker has “meaningful competitive advantages” in its Supercharger network and power train technology.
The analyst predicts that by the end of the decade, Tesla will have produced 220,000 vehicles. However, he says the biggest risk to the company over time continues to be its supply chain.
Explaining Tesla’s declining share price
Galves also provided his take on the recent share price declines at Tesla Motors Inc (NASDAQ:TSLA). He says the company’s third quarter metrics were very positive but that expectations for the automaker were just too high. Nonetheless, he stands by his 12-month price target of $200 a share.