Tesla Motors Inc (NASDAQ:TSLA) stocks are solidly above $250, recently hitting an all-time high of $265, but some more sober valuations show that the Gigafactory justifies a stock price bump in the $40 range, good news for long-term investors but not enough to justify a 31% rally in just over a week.

Tesla Motors TSLA

“While more exuberant analysts will point out the massive profits Tesla Motors Inc (NASDAQ:TSLA) will make in batteries, as with Ford Motor Company (NYSE:F) steel going into Ford cars, it is important to not double count the profits from vertical integration,” writes Barclay’s analyst Brian Johnson. “We had already assumed in our model that in ramping up to nearly half a million vehicles by the end of the decade that Tesla would access a large supply of lower cost batteries.”

Non-auto Tesla EPS around $2.15

The gigafactory is going to produce 35GWh per year worth of energy cells which it will use to fashion battery packs for its planned production of 500,000 cars annually. In addition to that, Tesla plans to buy another 15GWh/year worth of energy cells and produce more battery packs for resale. Since the savings from producing its own batteries was already priced into his model, Johnson focuses on the external sales (most likely to SolarCity).

Assuming a sale price of $200/kWh and 13% operating margin (in line with Tesla commentary) gives about $390 million in operating profit. Johnson applies a 20% tax rate and calculates non-automotive EPS of $2.15. With a 30x multiple, he estimates that this increases Tesla stock value by about $40.

“Not at all the financial game changer that is being priced into the stock,” he writes. Johnson has increased his price target accordingly, from $180 to $220, but he still gives Tesla an Even Weight rating.

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Joint venture not being considered by bulls

There are a couple of other potential snags that Johnson doesn’t think everyone is taking into account. First, the gigafactory is expected to be a joint venture, and this will affect how much profit from the complex actually flows to Tesla Motors Inc (NASDAQ:TSLA). Second, Johnson isn’t convinced that the chemical supply chain is in place to support such an increase in cell production.

No doubt Tesla Motors Inc (NASDAQ:TSLA) is working with its suppliers to ramp up production of lithium carbonate and other inputs, but whether they realize it or not Tesla bulls are betting that all of those suppliers will be able to execute – not just Tesla.