Tesla is working towards launching residential and commercial energy storage products, and investors are confident of including the “electricity utility TAM” in the Tesla valuation discussion, according to Morgan Stanley analysts. In a report issued on Tuesday, the firm reiterated its Overweight rating to the stock with a price target of $280.
Tesla to transform utility sector
Further, the analysts noted that the Tesla Energy solution could transform the multi-trillion dollar worldwide motor vehicle sector and the trillion dollar utility sector. They note that full deployment and consumer adoption can continue for another 5-10 years, which will drive the valuation to around $40-$90 per share. Analysts stated that from another perspective, each 1 million units of Powerwall sales will be somewhere around $10 billion, $72 per TSLA share or around 30% of Tesla’s current share price.
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Previously, Tesla stated that it intends to sell around 30% of the annual output of its gigafactory to the power sector. Morgan Stanley noted that by 2029, it expect “Tesla’s 6.4m unit global fleet will contain the stored energy capacity of 410 GW, a figure roughly equal to the entire daily electricity consumption of the nation of Mexico.”
Jefferies assigns bullish PT
Separately, Jefferies analysts initiated coverage on Tesla, assigning a Buy rating and a price target of $350, which is one of the most bullish. On average, analysts have set a price target of $257.10, and the average rating is Overweight.
Jefferies analysts believe the new battery will give Tesla a competitive advantage and open new markets. Concern about dim sales in China is “overblown,” according to the firm, as consumers are beginning to be inclined to consider alternative fuel vehicles. Analysts expect revenue growth between 35% to 40% over five years and the possibility of selling at least 500,000 cars per year by 2020 in North America and West Europe. Tesla is estimated to post an overall compound growth rate of 60% for earnings before interest, taxes, depreciation and amortization through 2020.
Tesla shares have gained 4.31% in the last three months, below the 5.32% gain of the NASDAQ 100. On Tuesday, Tesla shares closed up by 1.06% at $232.95, and year to date, the stock is up by almost 5%.