Tesla Motors Inc (NASDAQ:TSLA) stock jumped 2.70% in early trading Tuesday after Stifel analyst James Albertine upgraded the stock from Hold to Buy. In a research note dated September 1, Stifel set its price target on the stock at $400, which represents about 48% upside potential. Albertine defended his cautious Hold rating on the stock for more than a year, citing substantial risks.
Tesla is the ‘smart vehicle of the future’
Stifel said Tesla Motors Inc (NASDAQ:TSLA) has carved out a niche for itself in the global automobile market. The research firm said sentiment around the stock is like a “freight train,” reaping the benefits of a well-manicured growth story. The electric vehicle maker has positioned itself as the “smart vehicle of the future.” Albertine recently visited Tesla’s Fremont factory. He is confident that the company will achieve 1000 cars/week production run rate by the end of 2014.
Stifel said Tesla Motors Inc (NASDAQ:TSLA) is currently producing 800 cars per week while maintaining quality controls. The research firm believes that the San Francisco-based company can easily achieve its 2015 year-end target of 2,000 units/week. Even in the worst case scenario, demand for Tesla cars is unlikely to decelerate by the end of this decade. Tesla has build a resilient brand despite high profile accidents and fires. The apparent unwillingness of competitors to fully invest in the luxury EV market gives Tesla further head start.
Stifel expects Tesla to reduce wait time
What’s more, Stifel said its upgrade call has nothing to do with the Gigafactory or Model III volume/pricing expectations for 2020 or beyond. The research firm’s call is based on the Model S and Model X alone. The company management told Stifel that the current wait time for Model S is 5-6 months in Asia/Europe and 4-5 months in the U.S. Albertine expects Tesla to reduce the wait time to 2-3 months globally in the future.
Model X pre-orders are so strong that those who haven’t booked the crossover to this point, should expect deliveries in 2016. Stifel forecasts current quarter non-GAAP EPS of 4 cents compared to the Wall Street consensus of 2 cents. For the full-year 2014, the research firm expects $1.15 per share in EPS, well above the consensus estimate of $1.07. Stifel also raised its FY2015 EPS guidance from $3.63 to $4.01. The research firm expects Tesla Motors Inc (NASDAQ:TSLA) to deliver 73,500 cars in 2015.
