Tesla Motors Inc (NASDAQ:TSLA) has seen its share of ups and downs over the last couple of weeks, first because of the Model S fire and then because of volatility in the markets due to debt ceiling worries. This morning, however, shares rose more than 3 percent in premarket trading after a major upgrade from analysts at Wedbush.
Tesla upgraded to Outperform
Analysts Craig Irwin and Min Xu have been Neutral on Tesla Motors Inc (NASDAQ:TSLA) for some time, but today they issued a research note explaining their upgrade to Outperform. They also raised their price target from $180 per share to $240 per share.
David Einhorn's Greenlight Capital returned -2.9% in the second quarter of 2021 compared to 8.5% for the S&P 500. According to a copy of the fund's letter, which ValueWalk has reviewed, longs contributed 5.2% in the quarter while short positions detracted 4.6%. Q2 2021 hedge fund letters, conferences and more Macro positions detracted 3.3% from Read More
They said the results of a proprietary survey support higher expectations for sales of the automaker’s Generation III vehicle than they expected previously. They found “good receptiveness of mainstream car buyers” to buy electric vehicles. They also discovered that participants had “generally realistic expectations” surrounding the vehicle’s performance and costs.
Mass market EV potential is “significant”
The analysts surveyed 892 people and found that there is potential for significant mass market appeal for Tesla Motors Inc (NASDAQ:TSLA)’s Generation III vehicle in the $35,000 to $45,000 price range. They said more than 20 percent of those who responded said they would “absolutely consider” driving an electric vehicle. Sixty-five percent of those who responded were maybes. Their survey showed that 19 percent were willing to pay a $5,000 or more premium for a 90 percent improvement in fuel economy.
They say these results show that there’s “a healthy number” of mainstream car buyers who are both willing and able to pay the early premium to buy an electric vehicle with the expectation that the payback they would receive would be based on better fuel economy.
The analysts said they see the buyers in their survey as credible because 72 percent of the two groups they surveyed overlapped. Sixty-four percent scored within the top two tiers of their technology adopter quotient. They screened respondents to include only those who said they own or lease a car, truck or van and are planning to buy or lease a new vehicle sometime in the next year.
“Clusters of catalysts” for Tesla
They said they expect various catalysts for Tesla Motors Inc (NASDAQ:TSA), specifically around the opening of their new manufacturing facilities in Asia and Europe. They also believe more details about the upcoming Model X crossover vehicle and the Generation III vehicle to drive the automaker’s shares.
They believe Tesla management will soon share more details on their plans for future plans overseas, like location and capacity. In terms of the Model X and Generation III, more information could include models for test drive and initial orders for the vehicles.
Tesla forecasts raised
The Wedbush analysts also said they were raising their delivery forecasts for 2013 and 2014 because the momentum of the Model S “remains impressive.” Like other analysts have said, they note that self-reported VINs posted via Tesla Motors Inc (NASDAQ:TSLA)’s forums suggest that up to 7,000 units may have been produced during the third quarter.
They also raised their 2017 estimates for Tesla’s Generation III vehicle. They’re now forecasting 150,000 units, which is 50 percent above their previous forecast. After their survey, they now believe that in the long term, Tesla Motors Inc (NASDAQ:TSLA)’s Generation III vehicle could be a 300,000 to 500,000 unit product.