Credit Suisse analyst Dan Galves reiterated his Outperform rating and price target of $325 on Tesla Motors in a note on Monday. The analyst raised his price target from $290 to $325 but believes the stock could trade as high as $400.
Tesla to beat delivery estimates
Galves expects Tesla to deliver 11,000 to 11,500 units in the second quarter versus the guidance of 10,000 to 11,000. The analyst noted that the volumes the company achieved in April/May in North America and Europe were almost twice those of the January/February period. He believes even if the volume remained flat in June, with March’s volume of around 6,350 units, Tesla will be able to hit 12,500 units.
In the report, Galves noted that of the total 55,000 units guided for in 2015, 48,000 is for Tesla’s Model S. Hitting this number would mean 52% growth in the “3rd full year of Model S sales, undercut the most prevalent short thesis, and would increase confidence for 100k-150k combined S/X sales over next couple years.”
The analyst expects Tesla’s volume to rise 13,500 units in the second half of 2015 on the back of the Model S70D, which, according to Galves, was made available to U.S. and European customers by mid-May and June, respectively.
Tesla Energy could push valuation
Tesla Motors recently won a credit line of $500 million, and even if the EV maker uses $400 million of this, it would have $1.5 billion of cash by the end of 2015, which as per Galves is well above the $1 billion “comfort level.”
Noting that the “near-term” risks for the auto business have come down drastically, Galves says that Tesla Energy has the capability to add around 15% to 35% to late-decade auto revenues. This could help Tesla Motors’ valuation to go as high as $400 over the next 12 to 18 months, Galves said.
Of the 17 analysts covering the stock, 12 rate Tesla a Buy, while five rate it a Hold and three suggest it is a Sell. The highest price target given to Tesla is $400, while the lowest is $65. Since hitting a record high of $282 in September 2014, Tesla Motors shares have come down. On Monday, Tesla shares closed down 1.9% at $262.02, and year to date, the stock is up by almost 18%.